What is the outlook for the real estate market in South Korea?

Authored by the expert who managed and guided the team behind the South Korea Property Pack

Everything you need to know before buying real estate is included in our South Korea Property Pack

Who is the author of this content?

BAMBOOROUTES

A team specialized in real estate investing in APAC countries (Japan, Thailand, Indonesia, Australia, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in South Korea. If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At BambooRoutes, we explore the South Korean real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Seoul, Busan, and Incheon. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

What are the latest housing prices and transaction numbers in South Korea right now?

As of September 2025, Seoul apartment prices average KRW 13.4 million per square meter, more than double the national average of KRW 5.76 million per square meter.

Seoul has experienced 29 consecutive weeks of price gains, with apartment prices rising 3.6% year-over-year as of February 2025. The metropolitan area shows a 1.68% average increase, while premium districts like Gangnam see record highs with average apartment prices exceeding KRW 1.68 billion.

Transaction volumes tell a mixed story across the country. Seoul drove the national recovery with a 45.15% year-over-year increase in transactions, but nationwide volumes at 642,576 units remain 22.8% below the five-year average and 49.8% below the 2020 peak. Regional transaction volumes remain subdued despite Seoul's strong performance.

Commercial real estate shows stronger momentum, with transaction volume hitting KRW 15 trillion in the first half of 2025, representing a 53% year-over-year increase, mostly concentrated in Seoul's office sector.

How are short-term housing demand and supply trends shaping up for the next 6-12 months?

Urban demand remains steady through early 2026, particularly for smaller units and properties in emerging districts as demographic preferences shift toward single-person households and remote work flexibility.

Supply constraints continue to support Seoul prices, with new apartment developments facing regulatory hurdles and construction cost pressures. Regional cities experience rising vacancy rates and oversupply conditions, creating a stark contrast with the capital region.

The Bank of Korea's recent rate cut to 3.0% provides monetary stimulus, though lending restrictions for overheated districts remain in place. This policy combination supports urban market stability while attempting to prevent speculative bubbles.

Suburban transaction volumes are growing as improved transport infrastructure and remote work trends drive interest in areas with better value propositions than central Seoul districts.

What does the medium-term outlook for 1-3 years look like for South Korea's real estate market?

Seoul and the metropolitan region are expected to see 2-5% annual price growth through 2028, driven by continued economic concentration and employment opportunities in the capital area.

Regional cities face a different trajectory, with most markets likely experiencing continued stagnation or mild declines as population aging and outmigration persist. Government affordable housing initiatives and suburban development may slightly temper price disparities but won't eliminate structural gaps.

The rental market is evolving rapidly, with monthly rent (wolse) gaining popularity over the traditional jeonse system due to fraud risks and changing financial preferences. This shift creates new investment opportunities for institutional and individual landlords.

Policy focus on affordable housing and third-phase new town developments aims to increase supply in high-demand areas, potentially moderating price growth in some Seoul submarkets by 2027-2028.

What about the long-term trajectory for 5-10 years and beyond based on demographics?

South Korea's demographic crisis presents the most significant long-term challenge, with the world's lowest birth rate and rapidly aging population fundamentally reshaping housing demand patterns.

Which regions or cities in South Korea are expected to see the strongest price growth?

Seoul dominates the growth outlook with established momentum and structural advantages that should continue through the next decade.

Region/City	2025 Performance	Growth Outlook
Seoul (Gangnam)	Record high prices, +3.6% YoY	Strong premium growth
Seoul (Emerging Districts)	Above-average gains	Best value/growth balance
Incheon	+2.1% to +3.8% YoY	Emerging market potential
Gyeonggi Province	+0.32% YoY	Suburban beneficiary
Busan	-1.9% YoY	Potential stabilization
Daegu	-0.5% YoY	Continued challenges
Daejeon, Jeju	Decline up to -2.5%	Weak long-term outlook

Which areas are showing signs of stagnation or potential decline?

Regional cities outside the Seoul metropolitan area face the most challenging conditions, with demographic outflows and economic concentration in Seoul creating structural headwinds.

Daejeon and Jeju show the most concerning trends, with declines up to 2.5% annually and limited catalysts for recovery. These markets struggle with oversupply relative to local demand and lack the economic diversity to attract sustained investment.

Secondary cities like Busan and Daegu experience milder declines but face long-term challenges from population aging and industrial restructuring. While these markets may stabilize, significant growth appears unlikely without major economic development initiatives.

Rural and peripheral areas continue experiencing the steepest population declines, making property investments in these regions particularly risky for capital appreciation strategies.

It's something we develop in our South Korea property pack.

How do trends differ between apartments, single-family homes, and commercial properties?

Apartments dominate South Korea's residential market and show the strongest performance, particularly in Seoul where demand far exceeds supply for well-located units.

Single-family homes face declining demand in urban centers due to shrinking family sizes and lifestyle preferences favoring apartment living. These properties typically offer lower liquidity and slower price appreciation compared to apartments in the same areas.

Commercial real estate presents a mixed picture, with Seoul's office sector attracting strong investment flows and foreign capital, while regional commercial properties lag significantly. Logistics and industrial assets gain traction due to e-commerce growth and supply chain diversification trends.

Office buildings in Seoul's central business districts command premium valuations and steady rental income, making them attractive for institutional investors seeking stable returns in the 4-6% range.

What are rental yields like across different property types and locations?

Seoul apartments deliver average gross rental yields of 4.31%, with significant variation by unit size and location within the city.

Small apartments and studio units (1-bedroom) offer the highest yields at up to 6.57%, while larger family apartments typically yield less due to higher purchase prices relative to rental income. Emerging districts often provide better yield opportunities than established premium areas.

National average gross rental yields range from 4-5%, but investors should expect net yields approximately 1.5-2% lower after accounting for taxes, maintenance, and management expenses.

Secondary cities like Busan and Daegu offer higher yields due to lower entry prices, but this comes with slower capital growth prospects and higher tenant turnover risks. Commercial properties in Seoul can achieve yields in the 5-7% range depending on location and tenant quality.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in South Korea versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

How affordable is real estate right now relative to household incomes and mortgage rates?

Real estate affordability in South Korea presents a stark challenge, particularly in Seoul where the K-HAI (Korea Housing Affordability Index) reaches 151, indicating severely unaffordable conditions for average households.

Seoul's affordability index stands at twice the national average, reflecting the extreme price-to-income ratios in the capital region. The average Seoul apartment price exceeds 15 times the median household income, making homeownership increasingly difficult for young professionals and families.

Mortgage rates have moderated following Bank of Korea rate cuts, with the current benchmark at 3.0%, but lending restrictions remain in place for overheated districts. Banks maintain weighted average housing loan rates around 4.31% for new borrowers in the third quarter of 2025.

The traditional jeonse rental system becomes less accessible due to fraud risks and high deposit requirements, pushing more renters toward monthly rental arrangements that consume larger portions of household budgets.

If you're buying for your own living, what locations and property types make the most sense today?

Small apartments in Seoul's emerging districts like Mapo and Yongsan offer the best balance of accessibility, future growth potential, and current affordability for end-users.

1. **Seoul Emerging Districts**: Areas like Mapo, Yongsan, and parts of Seongdong provide good transport connections with more reasonable entry prices than premium districts.2. **Suburban Seoul/Incheon**: New developments with KTX and subway access offer larger living spaces and better value, especially for families willing to commute.3. **Transit-Oriented Developments**: Properties near new subway lines or KTX stations benefit from infrastructure investment and future connectivity improvements.4. **Smaller Unit Types**: Studio apartments and one-bedroom units offer the most accessible entry points while maintaining good liquidity for future resale.5. **Established Building Complexes**: Properties in well-managed apartment complexes with good maintenance and security typically hold value better than standalone units.

If you're buying to rent out, where do you get the best returns and at what budget levels?

One-bedroom apartments and officetel units in Seoul provide the highest rental yields, particularly in areas with strong single-person household demand and proximity to business districts or universities.

Budget levels for optimal rental returns start around KRW 400-700 million per unit in emerging districts, avoiding the premium pricing of established neighborhoods while capturing rental demand from young professionals and students.

Incheon and suburban Gyeonggi Province offer compelling opportunities for investors seeking lower entry costs with decent yields, especially near transport hubs and new town developments. These areas benefit from Seoul commuters seeking more affordable housing options.

Student housing near major universities consistently delivers strong rental performance, though investors should consider the cyclical nature of academic calendar demand and potential regulatory changes affecting foreign students.

It's something we develop in our South Korea property pack.

If you're buying with the intent to resell, which markets or property segments look most favorable?

Seoul's emerging districts like Yongsan, Mapo, and areas benefiting from new infrastructure projects offer the best combination of current value and future appreciation potential for resale-focused investors.

Small apartment units in these areas provide the highest liquidity and broadest buyer appeal, making them easier to exit when market conditions favor selling. Premium redevelopment projects in established districts also offer strong resale prospects.

Properties along new subway lines or near planned development projects benefit from infrastructure-driven value appreciation, though investors should carefully research completion timelines and potential delays.

Avoiding peripheral provinces and older single-family homes in regions facing demographic decline remains crucial, as these properties face limited buyer interest and potential long-term value erosion.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Bloomberg - South Korea Property Market Stabilization
2. Global Property Guide - South Korea Price History
3. BambooRoutes - South Korea Housing Market Forecast
4. BambooRoutes - South Korea Apartment Prices
5. BambooRoutes - South Korea Price Forecasts
6. South China Morning Post - Korea Real Estate Analysis
7. Federal Reserve - Korea Residential Property Prices
8. IMARC - South Korea Real Estate Market
9. Trading Economics - South Korea Housing Index
10. CEIC Data - Korea House Price Growth