South Korea’s real estate market is facing growing uncertainty amid political turmoil following the December 3 martial law declaration and impeachment proceedings against President Yoon Suk-yeol. The combination of political instability and restrictive lending policies has eroded buyer confidence, raising fears of a prolonged housing sector downturn.
Seoul’s apartment transactions have plummeted, with only 3,725 contracts in October compared to 9,206 in July. Preliminary November data points to an even sharper decline, with just 2,348 deals reported. In high-demand areas like Gangdong District, prices fell by 0.02% last week, marking the first dip in eight months and reflecting the market’s fragility.
Experts warn that political uncertainty is exacerbating economic instability. “The market is increasingly cautious as political instability spills into economic unease,” noted Kwon Dae-jung, a real estate professor at Sogang University. Without resolution, the real estate sector could face prolonged challenges.
Housing supply targets are also under pressure. The government aimed to approve 540,000 units this year but had cleared only 244,777 units by October, far below the annual goal. While public projects, including 14,000 affordable housing units, remain priorities, the private sector’s diminished activity and ongoing political unrest threaten broader supply efforts.
Key policies, such as redeveloping Seoul’s Greenbelt area and reconstructing first-generation new towns, face delays. Major real estate reform bills designed to ease redevelopment regulations are stalled in a politically gridlocked legislature. Kwon emphasized that delays in these initiatives could severely impact urban housing supply.
For South Korea’s real estate market to recover, political stability and decisive policy action are critical. Without these, the housing sector risks an extended period of stagnation, further undermining economic growth and development goals.
