Home Prices Rising by the Week Shatter Ownership Dreams in Seoul

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While concentration in large cities is a global trend, South Korea stands out: Despite three decades of balanced-development policies, including building entirely new cities, the flow toward the capital has intensified without a single reversal since the 1970s, KDI said in January.

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The government has repeatedly tried to counter that pull, but the forces drawing people into the Seoul area have consistently outweighed policy efforts to disperse growth.

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South Korea began relocating government ministries, agencies and state companies out of the capital in the mid-2000s, accelerating the push in the early 2010s with the creation of Sejong City as a new administrative hub. The moves were aimed at easing congestion in Seoul and slowing the concentration of people and jobs in the capital region.

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Those efforts haven’t changed the dynamics, and the political stakes are rising. After housing costs surged under the Moon Jae-in administration, real estate has remained one of South Korea’s most sensitive economic flashpoints. After taking office last June, President Lee described the housing market as a “ticking bomb” and pledged to rein in prices.

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Yet apartment values have continued to climb, fueling growing frustration among voters. Recent surveys show public approval of the government’s housing policies has deteriorated sharply, particularly in Seoul — a trend that risks weighing on Lee’s broader support ahead of nationwide local elections in June.

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In response, Lee has rolled out a series of new measures meant to cool the price rally. In practice, however, the steps have tightened conditions on both sides of the market: Stricter lending rules make it harder for buyers to finance purchases, while heavier tax and regulatory burdens discourage homeowners from selling, effectively freezing supply.

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The result is a system that leaves households with little room for error. If most people can realistically afford only one home, it makes sense to buy where demand is deepest and resale prospects are strongest, a dynamic that continues to channel buyers toward Seoul.

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In a social media post on Jan. 25, Lee ruled out another extension of the temporary tax break for multiple homeowners, saying the grace period for punitive capital gains taxes had already been set to expire and that distortions created by abnormal policies must be corrected, even at the cost of short-term pain.

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He followed up with a series of posts warning that authorities would not allow “waiting it out” to become a profitable strategy, adding that holding on to homes should not be cheaper than selling them. His remarks came amid reports of homeowners opting to hold on to properties rather than sell and pay higher taxes.

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Following Lee’s comments, presidential Policy Chief Kim Yong-beom told reporters on Jan. 28 that the government is reviewing broader changes to property taxation, including holding taxes, but cautioned that such reforms could have significant market implications and therefore aren’t something that can be announced within the next month or two.

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Tougher policies are reinforcing a preference for what many describe as a “one-shot housing bet.” With high-paying jobs and daily life increasingly concentrated in the capital, housing decisions are blending the need for shelter with investment logic — intensifying the pull toward Seoul rather than diverting it.

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South Korea said it will accelerate housing supply in the Greater Seoul area as part of a broader plan to break ground on more than 1.35 million homes nationwide over five years through 2030. The government will fast-track construction of about 60,000 homes as early as 2027, focusing on projects targeting younger households and newlyweds, including public-led redevelopment and rental housing on underused urban land.

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Seoul’s dense transit network, elite universities and density of high-paying jobs continue to draw people from across the country. As careers, social networks and opportunities cluster in the capital, many see little realistic alternative to staying and buying in Seoul.

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“If my job weren’t in Seoul, I might have chosen a different path,” said Jun Lee, who was born and raised in the city and has lived there his entire life. “But everything — work, life, relationships — is here.”

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—With assistance from Cat Barton, Jaehyun Eom, Yian Lee and Youkyung Lee.

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