The number of property transactions by foreign buyers flagged to authorities on suspicion of legal violations more than doubled in Seoul over a year, data showed. The findings come as tighter mortgage rules in South Korea raise questions about whether domestic and foreign buyers face equal constraints in financing home purchases.
According to parliamentary audit data submitted by the Ministry of Land, Infrastructure and Transport to Kim Jong-yang, a lawmaker on the National Assembly's Land, Infrastructure and Transport Committee, on the 16th, referrals involving suspicious foreign property deals in Seoul rose to 135 last year from 64 in 2024.
For transactions of 3 billion won ($2.2 million) or more, referrals more than doubled to 62 from 29 over the same period. For deals between 1 billion won and 3 billion won, the figure rose to 28 from 18.
Suspicious transactions are deals singled out for investigation because of irregularities in payment amounts or funding sources. When investigators suspect violations such as illegal inflows of overseas funds, improper gifting or false reporting, the cases are referred to relevant agencies.
The overall scale of investigations has shrunk. The number of foreign suspicious transactions investigated plunged to 557 in 2024 from 1,392 in 2023, and stood at 605 last year. Even with the far smaller caseload, referrals in Seoul and for deals of 3 billion won or more each more than doubled.
Among all referrals involving foreign buyers, Chinese nationals accounted for the largest share. Of 383 referrals tallied by nationality last year, 184, or 48.0%, involved Chinese nationals, approaching half the total. U.S. nationals followed with 107.
Land owned by foreigners in South Korea has also risen steadily. The number of land parcels held by foreign owners increased 18.6% to 199,003 at the end of last year from 167,725 at the end of 2021. Parcels held by Chinese owners rose 32.8% to 85,237 from 64,171 over the same period, with their officially assessed value up 31.0% to 4.3033 trillion won from 3.2845 trillion won.
As foreign property purchases increased, the government designated major areas in the Seoul metropolitan region as zones requiring permission for land transactions by foreigners in August last year. It said housing transactions by foreign buyers in the region fell 27% afterward. Still, the sharp tightening of domestic lending rules has brought the financing question to the fore, because foreign buyers can raise money abroad and are therefore less exposed to South Korean mortgage limits.
"The scale of investigations into suspicious foreign transactions has stayed flat, while suspected violations are shifting rapidly toward Seoul and ultra-high-priced deals," Kim said. "While the government leaves its monitoring net unchanged and squeezes only domestic buyers with loans and taxes, high-priced purchases by foreigners are effectively being left alone."
