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There are two reasons the Ministry of Land, Infrastructure and Transport put up a foreigner's investigation planning real estate speculation. The first is that “the real estate speculation of some foreigners, who are relatively freer than Koreans, such as getting loans from their own country in relation to real estate acquisition, is not properly managed.”
The second reason is that “the number of housing transactions by foreigners has been low at less than 1% of the total transaction volume, but the number of purchases has continuously increased during the recent housing price rise.”
Especially, it is said that abnormal signs such as foreigner's purchase of housing (up to 45 per person), purchase by minors (minimum age of 8), and high direct transaction ratio (47.7% of transactions between foreigners) are continuously being detected.
Both the first reason and the second reason cannot be agreed.
The first reason says that foreigners speculate on real estate in Korea with money borrowed from abroad, which is practically impossible and difficult to find the case of.
PapayaStory confirmed that neither China nor Vietnam provides loans for the purpose of purchasing real estate in Korea.
Even if they get a loan with personal credit, the moment they remit the funds to Korea, they will suffer a considerable loss in the exchange rate. Later, after disposing of the real estate, when the funds are brought back to their home country, they again suffer a loss in the exchange rate.
The claim that they are speculating differently in Korea by borrowing from a foreign country is nothing more than a suspicion that ‘foreigners are speculating in this way’ because the domestic regulations on mortgage loans are so strict.
The second reason is also difficult to accept. The Ministry of Land, Infrastructure and Transport announced that the number of housing transactions by foreigners from January 2020 to May 2022 was 20,038. This is only 0.87% of Korea's total housing transaction volume of 2,293,000 in 2020-2021. Considering the number of transactions until May of this year, it is below 0.7%.
This shows that foreign housing transactions do not have enough influence to lead real estate speculation in Korea.
Particularly, the Ministry of Land, Infrastructure and Transport announced that 1,145 of the 20,038 foreign housing transactions were suspicious. This is very insignificant amount.
We don't know what's wrong with foreigners doing business with foreigners. Transactions between foreigners who can speak the language better than Koreans who do not speak the language are quite natural.
However, it is appropriate to investigate the case of falsely reporting the sale price when transacting between foreigners, purchasing multiple houses, and buying houses by minors, as there is a possibility of violating the law.
In addition, there may be cases of illegally bringing in funds from abroad, so it is reasonable to investigate.
Nevertheless, the Yoon Seok-yeol government should not be “intimidated” by the claims of some who talk about real estate speculation and illegal activities without clear grounds because they are inflamed about the fact that foreign residents are buying houses.
We must not forget that Koreans also conduct real estate transactions in various ways, such as corporations and funds, as well as direct purchases in pursuit of profits overseas.
Related Articles: Ministry of Land, Infrastructure and Transport conducts investigation planning on foreign real estate speculation
Reporter Hasung Song
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