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South Korea's property market in 2025 presents a tale of two markets - Seoul continues its upward trajectory while regional cities struggle with declining prices and reduced demand.
The South Korean housing market shows clear regional divergence, with Seoul apartments averaging 13.4 million KRW per square meter while cities like Busan and Daegu hover around 6.7 million KRW per square meter. Transaction volumes remain steady in the capital but have decreased significantly in secondary cities, creating distinct investment opportunities depending on your strategy and risk tolerance.
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Seoul maintains its position as South Korea's most expensive property market with continued price growth of 3.6% year-on-year, while regional cities like Busan experience price declines of up to 3.9%.
The market forecast for 2025-2026 suggests moderate growth in Seoul (2-5% annually) with flat or declining trends in most other regions, driven by demographic challenges and supply-demand imbalances.
| Market Indicator | Seoul | Regional Cities | National Average |
|---|---|---|---|
| Average Price per sqm (USD) | $9,250 | $4,630-4,646 | $3,980 |
| YoY Price Change (2025) | +3.63% | -1.94% to -3.87% | +0.3% |
| Projected Growth (2025-2026) | 2-5% annually | Flat to declining | 1-2% annually |
| Rental Yield | 2-7% (avg 4.3%) | 3-5% | 3.5-4.5% |
| Transaction Volume Trend | Slightly up | Down/stagnant | Flat to modest decline |
| Foreign Buyer Activity | Concentrated, rising | Minimal | <2% of transactions |
| Market Outlook | Resilient growth | Structural challenges | Moderate stability |
What's the current average price per square meter for apartments and houses in Seoul, Busan, and other major cities?
As of September 2025, Seoul remains the most expensive housing market in South Korea with apartment prices averaging 13.4 million KRW (approximately $9,250) per square meter.
Regional cities show significantly lower price points, with Busan and Daegu both averaging around 6.7 million KRW ($4,630-4,646) per square meter. Incheon, despite its proximity to Seoul, maintains more affordable pricing at 5.6 million KRW ($3,906-4,980) per square meter, though it shows positive growth trends.
The national average sits at 5.76 million KRW ($3,980) per square meter, highlighting the substantial premium Seoul commands over the rest of the country. Houses typically price similarly or slightly higher per square meter in desirable urban districts, but apartments remain the primary market benchmark for comparison.
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| City | Price per sqm (KRW) | Price per sqm (USD) | YoY Change 2025 |
|---|---|---|---|
| Seoul | 13.4 million | $9,250 | +3.63% |
| Busan | 6.7 million | $4,630 | -1.94% |
| Daegu | 6.7 million | $4,646 | -3.87% |
| Incheon | 5.6 million | $3,906-4,980 | +2.1% |
| National Average | 5.76 million | $3,980 | +0.3% |
How much have property prices changed year-on-year in South Korea over the past five years?
South Korean property prices experienced significant volatility over the past five years, with the most dramatic changes occurring during the 2020-2021 boom period.
During 2020-2021, national average prices surged up to 12% year-on-year as low interest rates and pandemic-driven housing demand created a market boom. This growth phase peaked in 2022 before moderating due to rising interest rates and tightened government policies.
The period from 2023-2025 shows a clear market divergence, with Seoul continuing to post positive growth up to 3.6% year-on-year while regional cities like Busan entered mild declines of 1-2%. The national price index has largely flattened, showing less than 1% year-on-year growth in 2025.
This trend reflects the concentration of economic activity and population in the Seoul metropolitan area, creating sustained demand pressure that doesn't exist in other regions.
What's the projected annual price growth rate for the housing market in 2025 and 2026?
Market forecasts for 2025-2026 predict continued divergence between Seoul and regional markets, with Seoul expected to maintain moderate growth while other areas face stagnation or decline.
Seoul property prices are projected to grow 2-5% annually through 2026, supported by persistent supply shortages and sustained economic concentration in the capital region. Premium districts within Seoul may see higher growth rates, particularly for new luxury apartments.
Regional cities are forecast to experience flat or declining prices through 2026, with some areas potentially seeing continued negative growth of 1-3% annually. This reflects demographic challenges, reduced economic activity, and oversupply conditions in many secondary markets.
The national average is expected to show modest growth of 1-2% annually, primarily driven by Seoul's performance offsetting regional weakness.
How many housing transactions are happening monthly right now compared to last year?
Transaction volumes in September 2025 show mixed patterns across South Korea's regional markets, with Seoul experiencing slight increases while most other areas see reduced activity.
Seoul's transaction volume is modestly up compared to the same period last year, driven by continued buyer interest in the capital's resilient market. However, this increase is selective, with premium districts showing stronger activity than older residential areas.
Regional cities are experiencing down or stagnant transaction numbers, reflecting both price declines and reduced buyer confidence in these markets. Cities like Busan and Daegu show particularly weak transaction volumes.
Nationwide monthly transaction numbers remain flat or modestly down compared to the peak years of 2021-2023, indicating market stabilization rather than growth or decline. This reflects a more selective buyer approach and normalized market conditions after the pandemic boom period.
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What is the nationwide housing supply versus demand forecast over the next three years?
South Korea faces a persistent supply-demand imbalance that varies dramatically by region, with critical shortages in Seoul contrasting with oversupply in many regional areas.
Seoul continues to experience a significant housing shortage, particularly for new apartments in premium districts. Despite ongoing construction, supply remains insufficient to meet demand from both domestic buyers and the growing number of foreign investors attracted to the capital.
Regional markets face the opposite challenge, with many areas experiencing oversupply conditions that contribute to price declines. Construction activity in these regions has decreased substantially, with developers focusing resources on Seoul and its immediate surroundings.
The forecast for the next three years suggests this imbalance will persist, with Seoul's supply constraints likely to continue supporting price growth while regional oversupply maintains downward pressure on values outside the capital region.
How many new housing units are expected to be built in 2025 and 2026, and in which regions?
Construction forecasts for 2025-2026 show a significant reduction in new housing unit development compared to previous years, with activity concentrated heavily in the Seoul metropolitan area.
Unsold new housing supply has fallen by 15% nationally, indicating reduced construction pipeline. Only a few major residential complexes exceeding 1,000 units each are scheduled for completion in Seoul during this period, focusing on high-demand districts like Gangnam and Yongsan.
Regional construction activity has reached historic lows, with most secondary cities seeing minimal new residential development. Developers have largely shifted resources away from regional markets due to weak demand and price pressures.
The government has implemented supply-side incentives for developers to stimulate construction in non-Seoul regions, but market response remains limited due to fundamental demand weaknesses in these areas.
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What's the current mortgage interest rate and how has it shifted over the past 12 months?
South Korean mortgage rates have shown a moderating trend over the past year, providing some relief to potential homebuyers after the rate increases of 2022-2023.
As of April 2025, average mortgage rates stand at 3.98%, representing a decrease from the high of 4.27% reached a year earlier. This decline reflects the central bank's monetary policy adjustments, including a 25 basis point cut in May 2025 that brought the base rate to 2.5%.
Qualified buyers typically access mortgage rates ranging between 3.7% to 4.3%, depending on their creditworthiness and the specific lending institution. Banks have maintained relatively strict lending criteria, particularly for multi-home owners and speculative buyers.
The rate environment remains favorable for homebuyers compared to the peak period, though rates are still significantly higher than the ultra-low levels seen during 2020-2021 that fueled the housing boom.
How does household debt-to-income ratio in South Korea compare with global averages?
South Korea maintains one of the highest household debt-to-income ratios globally, significantly exceeding OECD averages and reflecting both elevated property prices and widespread lending practices.
The country's household debt-to-income ratio consistently ranks among the highest internationally, creating persistent concerns about long-term financial stability. This high ratio stems from expensive housing costs relative to incomes and the prevalence of leveraged property purchases.
Younger households face particularly acute debt burdens, often taking on substantial mortgages to enter the housing market in expensive urban areas like Seoul. This demographic carries disproportionate financial risk and sensitivity to interest rate changes.
Government authorities continue to monitor these debt levels closely, implementing periodic measures to curb excessive lending and promote financial stability, particularly in the overheated Seoul market.
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What percentage of foreign buyers are currently active in the market, and how is that trending?
Foreign buyer activity in South Korea's property market remains relatively modest at less than 2% of total transactions, but shows a gradually increasing trend, particularly in premium segments.
The majority of foreign investment concentrates in Seoul's prestigious districts, including Gangnam, Yongsan, and other high-end neighborhoods. Foreign buyers typically target new-build luxury apartments and premium residential developments rather than older housing stock.
Busan also attracts some foreign interest, particularly from investors seeking higher yields and lower entry prices compared to Seoul. However, activity levels remain much lower than in the capital.
The trend shows steady upward movement in foreign participation, driven by Korea's economic stability, relatively transparent legal system, and the appeal of Seoul as a regional business hub. However, foreign activity remains minor compared to domestic demand and has limited impact on overall market dynamics.
What's the rental yield in Seoul and other major cities, and how has it changed recently?
Rental yields across South Korean cities show significant variation, with Seoul offering diverse return profiles depending on the specific district and property type.
Seoul rental yields average 4.3% citywide, but this varies considerably by location. Emerging districts can deliver yields of 5-7%, while luxury core areas like Gangnam typically offer lower yields of 2-4% due to high purchase prices relative to rental income.
Regional cities like Busan generally provide yields in the 3-5% range, reflecting their lower property prices and stable rental demand. These markets often offer better yield-to-price ratios than Seoul's premium areas.
Rental yields have stabilized over the past year after several years of volatility during the pandemic period and subsequent market adjustments. The current yield environment reflects normalized rental markets and moderate price growth expectations.
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What are the government's latest housing policies or tax changes expected to impact demand?
The South Korean government has implemented several regulatory measures through September 2025 aimed at cooling speculative activity while supporting overall market stability.
New permit requirements now govern apartment transactions in Seoul's highest-demand districts, creating additional administrative steps for buyers and sellers. These measures target speculative activity without completely restricting legitimate transactions.
Stricter mortgage rules specifically affect multi-home owners, with enhanced scrutiny and potentially higher rates for investors acquiring additional properties. These policies aim to prioritize owner-occupiers over speculators.
The government continues reviewing capital gains and transaction taxes in high-priced urban areas, though no major new national property taxes have been implemented. Supply-side incentives remain in place to encourage construction in non-Seoul regions, though market response has been limited.
How are demographic shifts—like declining population and aging households—affecting future housing demand?
South Korea's demographic challenges present significant long-term headwinds for housing demand, with implications varying dramatically between urban centers and regional areas.
The country's population is flatlining due to extremely low birth rates and rapid aging, with projections suggesting nationwide housing demand will begin shrinking after 2035. This demographic transition represents a fundamental shift from the growth-driven demand patterns of previous decades.
Urban centers like Seoul will likely remain more resilient due to economic concentration and continued internal migration from rural areas. However, even these markets may eventually face demand pressures as the overall population shrinks.
Regional and rural housing markets face the most severe challenges, with weakening demand already evident in many secondary cities. Young adults increasingly delay household formation, contributing to reduced demand for new housing units across all markets.
These demographic trends support the current market divergence between Seoul and regional cities, and suggest this pattern may intensify over the coming decades.
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.
South Korea's property market in 2025 presents a clear dichotomy between Seoul's continued strength and regional market challenges, making location selection critical for any investment decision.
The combination of demographic headwinds, supply-demand imbalances, and government policy interventions will continue shaping market dynamics through 2026, favoring selective urban investment over broad market exposure.
Sources
- Average Apartment Price per Square Meter in Seoul
- Global Property Guide - South Korea Price History
- Average Apartment Price per Square Meter in South Korea
- South Korea Housing Market Outlook
- South Korea Price Forecasts
- South Korea Real Estate Market Outlook
- The Global Economy - South Korea Property Prices
- The Global Economy - South Korea Mortgage Interest Rate
- Trading Economics - South Korea Interest Rate
- Korea JoongAng Daily - Housing Supply Priority