Foreign buyers latest target of real estate ire in S. Korea
While South Koreans’ real estate transactions remain frozen due to a lack of supply and government loan restrictions, transactions of local land and properties by foreigners who face relatively relaxed rules in the first nine months of this year hit an all-time high, data showed Wednesday.
With foreigners’ purchases of high-value apartments continuing to make headlines in the news, coupled with the government requesting stricter loan restrictions against locals -- in a bid to curb the nation’s snowballing household debt -- resentment against foreign real estate transactions has been growing here.
Foreigners’ transactions in Korean land and properties in the January-September period amounted to 16,405 deals, the latest data from the Korea Real Estate Board showed, hitting a record high for the cited period since the state-run institution began compiling related data in 2006.
The figure is likely to eclipse last year’s annual reading of 21,048, and has jumped some fivefold from the January-September reading of 3,178 in 2006. Last year’s corresponding figure for the January-September period stood at 15,727.
In terms of property transactions in cities and provinces, Incheon, just west of Seoul, ranked No. 1 as the area that saw the most active such real estate transactions, with 3,056 deals.
Separate government data released last month showed that the number of registered foreign landlords here stood at 2,394 as of June 2020. Meanwhile, the number of Korean apartments acquired by foreigners from January 2017 to May 2020 came to 23,167 units, valued at a combined 7.6 trillion won ($6.4 billion).
Of the 2,394, the number of Chinese nationals registered as landlords here came to 885, accounting for 37 percent of the portion as of June last year. US nationals stood at 702, or 29.3 percent, while Canadian nationals came to 269, taking up 11.2 percent in the same period.
The slew of the latest data tied to foreigners’ buying of real estate properties here has fueled voices to adopt stricter regulations.
On Oct. 24, the Ministry of Land, Infrastructure and Transport announced its plans to draw up and submit a revision bill that would require foreigners to file documents with their alien registration number and purpose and duration of their stay, indicating such information has not been mandatory in acquiring property here so far. The ministry plans to submit the bill by Dec. 1.
In August last year, 34 civic groups gathered outside the Seoul government complex to protest the government’s “lax” regulations against foreign speculative buying of Korean land and properties. Protesters held signs that read, “Korean real estate regulations shouldn’t discriminate against Koreans.”
Critics claim foreigners have been relatively free from the government’s strict monitoring and taxation for owning multiple properties that Korean nationals are subject to. On top of that, while the government has been implementing stricter screening of multiple-property owners on whether they actually “live” at the property, it lacks data as to whether foreign landlords have been following the same rules.
Foreign investors can also dodge the strict loan restrictions, as they could borrow money from abroad and invest it here, they said.
Since July, financial authorities here have applied a 40 percent debt-service ratio on borrowers who purchase a home worth more than 600 million won in speculation-prone regions, expanding those subject to the restrictions in taking out home-backed loans. DSR measures how much a borrower has to pay in principal and interest in proportion to the person’s annual income. Mortgage lending on apartments worth more than 1.5 billion won have been temporarily banned as well.
Despite adopting more than 20 real estate measures since 2017, the Moon Jae-in administration has failed to curb the nation’s soaring housing prices.
The average price of an apartment unit measuring 82.4 square meters jumped around 80 percent from 660 million won in 2017 to 1.19 billion won in 2020, according to the Citizens’ Coalition for Economic Justice civic group. The organization examined 63,000 apartments in 22 apartment complexes in Seoul.
Published : Nov 3, 2021