2025 Korean real estate policy
Table of Contents
Prologue: The Dawn of the Real Estate Battle in Summer 2025
In the summer of Seoul, crowds gather at new town developments and reconstruction sites expecting new housing releases. People hesitate in front of mortgage calculators, and everyone listens closely to the flood of government announcements. “Will housing prices finally stabilize this time?” The government’s new policies, anchored on two pillars—expanding supply and strengthening financial regulations—foretell fundamental changes in the future of housing prices.
Innovation in Supply – Building More Houses, Faster
- The Year of Supplying 2.5 Million Houses
From 2025 to 2027, a total of 2.5 million houses will be supplied nationwide, with 1.58 million in the metropolitan area and 500,000 units in Seoul alone.
New towns around key GTX subway lines (D/E/F) will be developed, alongside the reorganization of first-generation new towns such as Ilsan and Bundang.
Public rental housing totaling 700,000 units targeting youths and newlyweds will be launched, including “Sleeper+Station” platform-style housing near transit hubs.
Unused land owned by public institutions and companies will be rapidly converted to residential use, with expanded high-density development in urban centers. - Easing of Reconstruction and Redevelopment Regulations
Floor area ratios will be significantly increased—for example, from 150% to 300% in certain areas, and up to 500% in leading districts.
There will be administrative support acceleration in first-generation new towns, and new development methods like Public Housing REITs are being considered. - Advancements in Housing Welfare and Energy Efficiency
Urban public complex projects will be promoted to improve the quality of rental housing.
The zero-energy building standard will be tightened from 120kWh/sqm to 100kWh/sqm, with construction costs increasing by approximately 1.3 million KRW per 84 sqm but saving around 220,000 KRW annually in energy. - Improvement of Rental Market and Building Quality
Floor thickness standards will be raised from 21cm to 25cm to reduce noise; noise levels permitted will decrease from 49dB to 37dB or below.
Measures to prevent lease deposit fraud, improve transparency of monthly rent information, and diversify tenant protection policies will be enhanced.
Financial Regulation – Tightening the Grip on Loans and Speculation
- The Core of the “June 27 Real Estate Measures”
Mortgage loan limits in metropolitan and regulated areas have been capped at 600 million KRW.
Loan maturity periods have been shortened from 40 years to 30 years, increasing monthly repayment burdens.
Loan-to-value (LTV) ratios for first-time buyers have been lowered from 80% to 70%.
For multi-homeowners, new mortgage lending is completely banned; one-homeowners must sell existing properties within six months when obtaining a new loan.
Strict occupancy requirements mandate moving into the home within six months of loan execution, with penalties including loan recall and a three-year lending ban for violations.
Stabilization loans for living expenses capped at 100 million KRW; welfare mortgage loans (e.g., Didimdol, Buteemok) limited to 200-250 million KRW.
“Gap investing” via lease loans conditional on ownership transfers is fully banned; unsecured loans restricted to below annual income.
Debt service ratio (DSR) stress testing stages have been enhanced to tighten loan approval processes. - Tax Relief and Market Stabilization
Capital gains tax exemption up to 1.2 billion KRW for primary residences and long-term holding tax discounts up to 80% for eligible homeowners.
Tax penalties on multi-homeowners are eased or deferred, with tax benefits incentivizing rental housing supply.
Small-scale new and unsold units excluded from heavy tax burdens. - Special Loans for Youth and Newborn Families
Income requirements for special loans eased—from 130 million KRW combined household income to 250 million KRW—and preferential interest rates up to 0.4% are applied.
Eligible homes capped at 900 million KRW in value, rental deposit loans limited to 300 million KRW, and asset ceilings at roughly 469 million KRW, effective as a temporary measure until 2027.
Market Changes Seen Through Real Cases
Buying an additional apartment worth 1.6 billion KRW in Songpa-gu, Seoul now faces a loan cap of 600 million KRW, requiring significant cash upfront.
Gap investing on a villa priced at 400 million KRW is now impossible, as lease deposit loans of 350 million KRW have been blocked.
New town developments like Dongtan are offering 18,000 new units in 2025, with soaring competition in subscriptions.
Youth tenants in “Sleeper+Station” housing enjoy 40% lower monthly rents, with housing close to workplaces.
Newly built housing with energy-saving features sees initial cost increases of 1.3 million KRW but achieves payback within five years due to utility savings.
Summary of Policies and Implementation Plans
Policy Name | Implementation Date | Main Focus | Details |
June 27 Real Estate Measures | June 28, 2025 | Loan Regulation, Occupancy | Mortgage cap of 600 million KRW, 30-year maturity, gap and speculation ban |
Housing Supply Expansion | 2025-2027 | New Towns, Rental Homes | 2.5 million units nationwide, 500,000 in Seoul, 30,000 new units in new towns |
First-time Buyer Loan Limits | July 2025 onwards | LTV 70%, Borrowing Limits | Max loan 560 million KRW on 800 million KRW home |
Welfare Loan Limits: Didimdol, etc. | July 2025 onwards | Loan Caps Reduced | Newlyweds and homeless limited to 200 million KRW |
Living Stabilization Loans | July 2025 onwards | Loan Caps, No Multi-home | Max 100 million KRW for living expenses |
DSR Three-step Adoption | July 2025 onwards | Loan Screening Strengthened | Application of stricter debt service ratio rules |
Market Outlook and Response Strategies
- Housing Price Stability Versus Rapid Changes
With tightened financial regulations, investment demand is expected to drop and transactions will shift toward genuine homebuyers. Large-scale supply will cause short-term tightness and strong price trends but bring mid- to long-term price stabilization as new homes come onto the market. - Polarization by Region and Demographic
Metropolitan and areas close to transportation are expected to see stable supply and prices, but regional divides may deepen. Benefit distribution from policies will differ by social group and region. - Financial Market Variables and Policy Risks
Rising interest rates increase borrowers’ repayment burdens and may dampen purchasing sentiment. Speed and effectiveness of policy implementation will be key, alongside challenges like construction delays and budget restraints. - Strategies for Genuine Buyers and Investors
Buyers should fully leverage public rental housing, subscription systems, and tax benefits while carefully checking loan conditions and residency requirements. Investors and multiple home owners need to adjust strategies to tighter financing and tax conditions, consider small new homes and rentals, or pivot toward owner-occupancy models.
Epilogue: A New Set of Rules in the Housing Game
In 2025, the rules of the real estate game have changed. Loans and speculation are strictly controlled, and the twin pillars of expanding supply and respecting the market will determine policy success. For the homeless and youth, affordable housing opportunities emerge; investors must seek new strategies in a transformed regulation environment. Housing is not merely a refuge but a barometer of society’s future and the economy. Within this wave of change, the 2025 Korean real estate market invites everyone to find their best path forward.