7 keywords that dominated the real estate market this year
in 2025, the apartment market was driven by three pillars: regulations, interest rates, and demand shifts. The balloon effect was also present as regional polarization intensified. Despite the new government's three rounds of real estate measures, the Gangnam area and core locations remained unshaken, while the temperature difference between the outskirts of the capital and the provinces widened.
there are seven keywords that have dominated the real estate market this year: lending restrictions, skewed prices, balloon effect, lotto subscription, polarization, rising rental prices, and accelerating renting. with a shortage of rental properties and soaring rental prices, 2025 was a tumultuous year for the real estate market.
summary of the new government's three major real estate measures
june 27 Measures, the beginning of limiting loan-to-value limits
after the new government took office in June of this year, a series of bold real estate policies were announced. First, the June 27 plan capped mortgage loans at a maximum of 600 million won in the Seoul metropolitan area and speculative hotspots. multiple homeowners with two or more homes were banned from taking out a main mortgage to purchase additional homes, and subletting conditional on ownership transfer was also banned to reduce incentives for gap investments.
september 7 measures, 1.35 million housing units planned for the metropolitan area
on September 7, a plan to expand housing supply was announced. it included a long-term supply plan to build 1.35 million housing units in the Seoul metropolitan area by 2030, along with a policy to speed up the supply by allowing LH to develop public housing directly. The LTV cap for regulated areas was reduced from 50% to 40%, and the cap for sub-letting was unified at 200 million won.
october 15 measures, the strongest demand suppressors
the October 15 measures, considered to be the strongest demand suppression measure, designated all of Seoul and parts of Gyeonggi-do as regulated areas and imposed a physical residency requirement. Financial regulations were also tightened, including expanding the application of DSR and stress rates. the stricter regulations have slowed down house prices, which had been rising in the Gangnam 3 district and the Han River belt, but have also shifted demand to the condominium, leasehold, auction, redevelopment villa, and office building markets.
a rush to the metropolitan areas
the real estate market in 2025 is in the midst of a hyperpolarization, with certain locations and certain products attracting demand while others are completely ignored. This was especially evident in the residential market.
this year, the top of the list was dominated by complexes located in Seoul, as the upper price cap resulted in a reverse phenomenon of lower sales prices compared to the surrounding market, and complexes with billions of won in price gains emerged, while rural and non-preferred areas remained unsold and oversupplied. of the 226 complexes launched this year, more than half, or 125, were unsold.
From January to November, Seoul apartments rose by an average of 10.02% and the metropolitan area by 3.41%, while the five largest cities recorded a negative 1.76% and the rest of the country a negative 0.76%, according to data from KB Real Estate Data Hub. the difference between Seoul and non-Seoul apartment price index changes is stark.
shortage of rental units and upward pressure on sublet prices
the tightening of the residency requirement in Seoul and parts of Gyeonggi Province has made gap investments impossible, and the increasing number of tenants using their contract renewal rights to renew their leases has led to a shortage of rental properties. in recent years, the shortage of rental properties and the phenomenon of renting out have led to a rise in rental prices.
looking at the change rate of rental prices by region from January to November, Gwacheon, which is experiencing demand for rebuilding migration, saw the highest increase at 10.36%, followed by Gangdong-gu, Seoul at 9.14%, Hanam at 8.63%, Guri at 7.02%, and Songpa-gu, Seoul at 6.68%.
the share of renting is expanding rapidly as landlords prefer renting to earn interest on rental deposits as it provides more stable cash flow. this is not a temporary phenomenon, but a sign that the rental structure is gradually shifting towards renting in the residential market. this trend is likely to continue into 2026.
frequently asked questions
Q1. What are the key watch points for the real estate market in 2026?
A. Following on from 2025, 2026 could be a year of rental shortages. existing tenants are increasingly using their lease renewal rights, resulting in an absolute shortage of rental properties. it seems likely that the rental market will fluctuate.
Q2. Is there any chance of a real estate tax reform?
A. The government may pull out the tax reform card next year if Seoul's rising real estate prices don't subside. many experts believe that it is more likely that the tax rate itself will not be changed, but rather the realization of the posted price and an increase in the fair market value ratio.
Q3. Will there be a flurry of sales during the multifamily transfer tax and before the moratorium ends?
A. The multi-family transfer tax deferral is scheduled to end on May 9, 2026. if the deferral ends as scheduled, the tax burden could spike up to three times the base rate, which would likely result in a short-term rush to sell. however, some predict that owners may be able to hold on.
Q4. When will the local real estate market recover?
A. The local real estate downturn is structurally driven by a declining population and churning demand, making it difficult to expect a short-term recovery. even if the high interest rate situation eases and the economy recovers, the skew toward the capital region is expected to continue for some time.
Q5. Should I buy a house in Seoul now?
A. The core Seoul location remains strong due to tight supply and asset protection demand. however, as loan limits have been reduced due to DSR tightening and loan-to-value regulations, we recommend that you carefully plan your financing and make a decision based on your own circumstances if you are looking to live in Seoul.
conclusion
the real estate market in 2025 was a testament to the power of location and demand. lending regulations were tightened step by step, but the core of Seoul remained unshaken, and the polarization between the capital and the provinces became more pronounced. this is likely to continue in 2026 as supply, financing conditions, and regulations continue to drive the market.
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