Foreign property deals in Korea hits all-time high during housing frenzy in 2020

Building transactions by foreigners in South Korea reached an all-time high of 21,048 last year during the housing frenzy triggered by stricter rules on housing purchases to prevent speculative deals, with a majority of the deals concentrated in the most affluent southern Seoul area.

According to the Korea Real Estate Board on Tuesday, foreigners¡¯ property transactions – including housing and commercial buildings – in Korea hit 21,048 in 2020, up 18.5 percent from the previous year. It is the largest foreign property deals since the agency began compiling related data in 2006. Foreign property deals are those in which either the buyer or seller is a foreigner.

The number of foreigners¡¯ building transactions has been on a rise every year since topping 10,000 in 2014. In 2015, there were 14,570 foreign property transaction deals, 15,879 in 2016, 18,497 in 2017, and 19,948 in 2018. In 2019, the overall number dropped 11 percent to 17,763 but rebounded 18.5 percent last year to exceed 20,000 mark for the first time.

A majority of the transactions took place in the Seoul and surrounding areas – 8,975 cases in Gyeonggi Province, 4,775 in Seoul, and 2,842 in Incheon.

Foreign property transactions in Seoul increased 22.9 percent on year, Gyeonggi Province 18.1 percent, and Incheon 5.2 percent.

In Seoul, transactions were most active in Gangnam District, southern Seoul area where many high-priced, high-rise buildings are clustered, followed by those in Guro District, Seocho District, Yeongdeungpo District, Jongno District, and Songpa District.

The latest numbers come at a time when property prices in the capital area has skyrocketed last year, prompting tax authorities to look into speculative deals.

In August, the National Tax Service said that it has launched an investigation into tax evasion cases in foreign property deals. Investigation showed that 32.7 percent of apartments purchased by foreigners between January 2017 and May 2020 were never resided by the foreign owners.

In response to the spike in foreign property purchases, Korean law makers have been trying to introduce bills that can impose tougher rules on real estate purchases by non-Korean nationals.

Currently, foreigners are not subject to the nation¡¯s strict mortgage rules that are imposed on all Korean residents so that they have easier access to the local property market, which could trigger speculative buying among foreigners.

[¨Ï Maeil Business Newspaper & mk.co.kr, All rights reserved]