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| Apartment complexes in Seoul, Korea Times file |
The number of property transactions involving non-Koreans in two districts in Seoul known for having a large Chinese population hit an all-time high in September, indicating the panic-driven apartment buying spree is expanding to include wealthy minorities.
Non-Koreans ― mostly Chinese nationals ― account for 13.1 percent of the population in Geumcheon District and 12.5 percent in Guro District, both in southwestern Seoul.
Data from Korea Appraisal Board (KAB) showed the number of properties bought in Geumcheon nearly tripled in September to 36 month-on-month, up from 13 in August. In neighboring Guro area the number of properties sold jumped to 37 from 27, up 37 percent from the month before.
The number of properties traded in the two districts combined stood at 73, up 82.5 percent from 40 in August. This broke the previous record of 58 in June.
The September figures involving the two southwestern districts are notable given that property transactions in three affluent districts in southern Seoul show signs of falling in the same period.
The three affluent districts ― Gangnam, Seocho and Songpa ― saw the number of transactions fall to 78 in September from 123 in August, when it hit a 12-month high.
The August figure was explained by non-Koreans rushing to buy high-priced apartments put up for sale by Koreans who are feeling uneasy over price uncertainty due to stricter lending rules and heavier taxes on multiple homeowners.
But the market in the following month experienced some adjustments putting the brakes on a rapid climb over the past few years.
Yet the three affluent districts are still favored by non-Koreans as an ideal investment.
According to data submitted to Rep. Hong Kee-won of the ruling Democratic Party of Korea (DPK) from the Ministry of Land, Infrastructure and Transport, the number of apartments in Seoul bought and sold by non-Koreans was 925 in the January-August period.
The annual figure is expected to easily top last year's 1,129, a figure on a continued decline from 1,529 in 2018, further down from 1,775 in 2017.
The growing foreign presence in the local real estate market according to market experts is a major factor driving up housing prices.
Non-Koreans can buy real estate anywhere here without hurdles, whereas buying homes in government-designated, speculation-prone areas is strictly prohibited for Koreans. This includes the entirety of the cities of Seoul and Incheon in addition to areas in Gyeonggi Province, and select provincial areas with growing commercial presence.
Also enjoyed by non-citizens is a benefit in being able to avoid strengthened local lending rules put in place to limit demand for mortgages for the purpose of real estate speculation.
"Foreign buyers do not necessarily borrow money from Korean banks that apply limits in the borrowing amount total according to a loan-to-value ratio and debt-to-income ratio," Myongji University professor of real estate Kwon Dae-jung said.
"This is why voices calling for heavier tax on them is somewhat justified," he added, given other countries tend to be stricter against foreign speculative forces.
"Raising the tax rate may sound harsh but is an understandable move, because most other countries do the same," he said.
