Transactions suspected of being gap investments — buying a home while a tenant's jeonse deposit covers most of the price — fell by nearly 70% in Seoul after the Oct. 15 housing market stabilization measures last year designated the entire city as a land transaction permit zone. The designation tightened owner-occupancy requirements, and the government's tax overhaul plan added lending restrictions for owners who do not live in the home they buy, blocking much of the investment demand for purchases backed by jeonse deposits. Still, with the rental market under growing strain, buyers in their 20s and 30s who lack capital accounted for a larger share of such deals than other age groups, apparently trying to catch the last train to buying a first home even if it meant using gap investment.
An analysis of transactions across Seoul's 25 districts, obtained by Seoul Economic Daily on the 5th through the office of Rep. Kang Deuk-koo of the Democratic Party of Korea, a member of the National Assembly's Land, Infrastructure and Transport Committee, showed suspected gap-investment deals fell 67.8% to 2,442 from 7,579. The comparison covers the year before Oct. 15, 2025 (Oct. 15, 2024 to Oct. 14, 2025) and the roughly 11 months that followed (Oct. 15, 2025 to Sept. 17, 2026). The analysis counted purchases in which the acquired home carried both a rental deposit and a loan from a financial institution, and the buyer listed the planned use as "rental." The figures do not capture every gap investment, but they serve as an indicator of purchases made with minimal equity and topped up with a tenant's deposit, and can be read as deals suspected of being gap investments.
Under the Oct. 15 package last year, the government designated all 25 Seoul districts and 12 areas in Gyeonggi Province as land transaction permit zones, adding Hwaseong's Dongtan, Guri and Yongin's Giheung from July 5 this year. Buying a home inside a permit zone requires approval from the local authority before signing a contract, and buyers are in principle required to live in the home.
Suspected gap-investment deals dropped sharply in most districts. Transactions fell in 23 of Seoul's 25 districts; Jungnang (up 83.3%) and Geumcheon (up 130.8%) were the only districts to see an increase. Seongdong posted the steepest drop, down 88.4% to 92 deals from 793, while Mapo (-79.7%), Nowon (-79.6%), Gangdong (-78.3%) and Gangnam (-76.2%) all fell by roughly 80%.
By age, suspected gap-investment deals by buyers in their 30s fell 65.1%, a steeper decline than the 18.6% drop among those in their 20s. Deals fell 76.4% among buyers in their 40s, 69.5% among those in their 50s and 54.6% among those 60 and older. Absolute transaction volumes declined across every age group, but the declines were relatively smaller among younger buyers.
The shift in shares is especially notable. Buyers in their 30s accounted for 43.3% of all suspected gap-investment deals in the year before the Oct. 15 package, a share that rose to 46.8% afterward. The share held by those in their 20s more than doubled to 7.9% from 3.1%. That suggests younger buyers, whose equity is relatively small compared with home prices, are still turning to gap investment to purchase homes. Buyers in their 20s and 30s who lack capital inevitably rely more heavily on loans and rental deposits when buying a home. The increase in demand for homes priced at 1.5 billion won or less, which qualify for loans of up to 600 million won, is attributed to the same reason.
The decline in suspected gap-investment deals cannot be attributed to the permit zone designation alone, but the government's aim of making investment purchases harder by tightening owner-occupancy requirements — and thus limiting the use of rental deposits and loans as leverage — is showing some effect.
The findings are expected to influence a decision at the end of the year on whether to extend the permit zone designations. Hong Ji-sun, minister of land, infrastructure and transport, said at a confirmation hearing last month that a decision on extending the designations covering all of Seoul and other areas would come after a close review of market conditions. The government has recently paired protection for owner-occupier buyers with curbs on speculation, expanding deferrals of the owner-occupancy requirement to allow transactions involving homes currently leased out, while keeping the requirement that buyers not own another home and the two-year residency obligation. The ministry said last month that it would extend the deferral period to cover renewal contracts while maintaining its principle of blocking gap investment.
