Published on and written by Cyril Jarnias
South Korea is redefining, sometimes painfully, the role of the second home within its real estate landscape. Between soaring prices in Seoul, a persistent slump in the provinces, the rise of remote work, an influx of foreign capital, and a slew of tax measures targeting areas with declining populations, the South Korean second-home market increasingly resembles an open-air laboratory.
In Korea, a second home goes beyond its simple leisure function. It is used as a tool for wealth diversification, an instrument of regional policy, and a sophisticated investment product. However, much like some rural areas in Japan, it can also become a hard-to-sell asset.
An Ultra-Polarized Overall Market: Seoul vs. the Rest of the Country
To understand the South Korean second-home market, one must first look at the overall backdrop. The country is experiencing extreme polarization in its real estate market, which the OECD describes as the largest price gap between large and small cities among its members.
While the national housing price index increased by only 0.31% year-on-year in February 2025 – which, adjusted for inflation, actually corresponds to a decline of 1.67% – the capital is on a very different trajectory. Seoul’s index rose 3.63% year-on-year, while the entire metropolitan area (Seoul, Incheon, Gyeonggi) advanced by 1.68%. Outside this zone, prices have been falling for the third consecutive year.
Average price in millions of won per square meter for a new apartment in Seoul in February 2025, 2.3 times the national average.
The country is now described as a “two-market story”: a Seoul under permanent tension, with little new supply and sustained demand, and regions sinking into a downward spiral, fueled by depopulation, lack of jobs, and deindustrialization.
Regions in a Prolonged Crisis
On-the-ground figures confirm this two-speed scenario. In 2024, residential sales rose by 15.77% nationwide, but this recovery is driven almost exclusively by the capital region. Transactions in Seoul surged by 45%, in Gyeonggi by 22.8%, and in Incheon by 11.8%. In non-metropolitan regions, the increase is only 1.5% year-on-year, and Jeju Island even saw its transaction volume decline.
In South Korea, apartment prices are falling in all major cities (Busan, Daegu, Gwangju, Daejeon, Ulsan), with a drop of over 5% year-on-year in Sejong. Outside the capital region, prices have been declining for 55 consecutive weeks as of mid-2025.
In this context, second homes located in the provinces sometimes turn into a wealth trap: difficult to resell, and the prospect of capital gains recedes as the population ages or migrates to Seoul.
Table – Average Prices and Changes by Region (February 2025)
| Region / City | Year-on-Year Price Index Change | Average Price (KRW / m²) |
|---|---|---|
| Seoul | +3.63% | 13,396,000 |
| Capital Region (Seoul+Incheon+Gyeonggi) | +1.68% | 8,531,000 |
| Incheon | +0.63% | 5,644,000 |
| Gyeonggi | +0.32% | 6,554,000 |
| Busan | -1.94% | 6,690,000 |
| Daegu | -3.87% | 6,713,000 |
| Gwangju | -1.13% | 6,003,000 |
| Daejeon | -1.07% | 5,366,000 |
| Ulsan | -0.11% | 5,334,000 |
| Sejong | -5.06% | 5,425,000 |
| Other Regional Cities | -0.30% | 4,605,000 |
In a country where household savings are massively tied up in property – real estate and other physical assets represent over 75% of average household wealth, compared to less than 25% for financial assets, and over 80% for those over 60 – this polarization raises a key question: does a second home remain a lever for wealth, or does it become a burden outside of a few flagship markets?
Second Homes: A Profile of Multi-Property Owners
National data shows that property accumulation is not marginal. In 2023, about 2.34 million people, or 15% of property owners, owned at least two homes. This proportion peaked in 2019 at nearly 16% before declining slightly, under the effect of strengthened taxation targeting multi-property owners.
Conversely, 85% of owners only possess one property. Unsurprisingly, the higher the value of real estate assets, the greater the number of homes owned: the top decile of households by asset value owns an average of 2.37 homes, while the bottom decile flirts with “zero ownership,” with only 0.98 properties on average.
A Geographical Paradox
Interestingly for the South Korean second-home market, it is in some peripheral regions where multi-property ownership is most frequent. Jeju has the highest rate of multi-property owners (20.3%), followed by South Chungcheong Province (17.7%). In Seoul and Gyeonggi, the ratio is lower, around 14%.
This example illustrates the real estate divide in South Korea, where on one side you have urban households, particularly in Seoul, heavily indebted to acquire their primary residence, and on the other, a more affluent category of owners who multiply purchases of second homes for vacation purposes, especially on Jeju Island or in historic cities like Gyeongju.
Increasingly Refined Taxation
The core of regulation lies in the property holding tax. The law governing the “comprehensive real estate holding tax” has been amended multiple times since 2005, with increasingly refined rules.
An extremely favorable tax regime is granted to “one home per household owners.” They benefit from a 1.2 billion won deduction on the tax base, as well as tax credits of up to 80% for seniors and long-term holders. However, as soon as a household owns more than one home, the rates of the comprehensive tax increase sharply and can apply to their entire property portfolio, including the second home.
Certain categories of housing – for example some public rental housing, employee housing, unsold units held by developers, or single-family homes outside the capital region – may be excluded from aggregation, creating niches where a second home can be fiscally softened. But in practice, for an urban household buying a vacation apartment in an expensive area, the additional tax burden is far from negligible.
The Major Pro-Regions Tax Offensive: The Second Home as an Anti-Desertification Tool
Faced with an explosion of unsold properties and a sustained drop in prices in the provinces, the state has decided to transform the second home into an overt instrument of regional development policy. The pivot is called the “Regional Construction Investment Support Plan,” a plan to support investment in local construction that changes the game for households with only one home.
The basic idea is simple: massively reduce the taxation of households that buy a second home in areas with declining populations.
Raised Thresholds, Multiplied Benefits
Initially, the tax benefits concerned 84 “population decline areas.” The scheme was expanded to nine additional priority areas – Gangneung, Sokcho, Inje, and Donghae (Gangwon), Iksan (North Jeolla), Gyeongju and Gimcheon (North Gyeongsang), Sacheon and Tongyeong (South Gyeongsang) – all natural candidates for second homes, mixing tourist appeal and demographic imbalance.
The price thresholds for benefiting from advantageous tax schemes in South Korea have been significantly increased. The maximum declared value for a property to be eligible rises from 400 to 900 million won. Simultaneously, the acquisition price threshold for obtaining a tax reduction is raised from 300 million to 1.2 billion won. Consequence: many new apartments and luxury villas in tourist cities are now included in this perimeter, broadening access for an affluent clientele.
The tax benefits affect several levels of taxation. For the comprehensive property tax, an owner remaining a single-property household but buying a second home in these zones can benefit from the 1.2 billion won deduction and specific credits. On the acquisition tax, non-owners and single-property owners can get up to a 50% reduction when buying a second property in an eligible area.
The official objective is twofold: to absorb the stock of unsold homes – of which over 83% of the nearly 26,700 completed and unsold units as of late June are located outside the capital region – and to breathe new life into the construction sector in the provinces.
Table – Key Parameters of Incentives for Second Homes in Declining Areas
| Element | Before Reform | After Reform |
|---|---|---|
| Areas Concerned | 84 decline zones | 84 zones + 9 priority areas |
| Maximum Declared Value for Eligible Property | 400 M KRW | 900 M KRW |
| Acquisition Price Ceiling for Acquisition Tax Reduction | 300 M KRW | 1.2 B KRW |
| Acquisition Tax Reduction | Low limit | Up to 50% for single-property owners |
| Comprehensive Property Tax | 1.2 B KRW deduction for 1 household-1 home | Maintained, with senior/long-term holder credits |
A Highly Contrasted Market Reaction
The immediate results are far from spectacular. Initial transaction data after the announcement show divergent trajectories: declining volumes in Gangneung, Donghae, Inje, Sacheon, or Tongyeong, increases in Sokcho, Iksan, Gyeongju, and Gimcheon. In other words, the tax measures are not enough to reverse the trend everywhere.
In some areas, the lack of tourist infrastructure and services limits the appeal for a second home. In others, the feeling that ‘prices will fall further’ fosters a culture of non-purchase, reminiscent of the Japanese trajectory where a generation ended up considering provincial real estate as doomed to depreciate.
Real Estate Analyst
Voices in the sector believe that reducing taxes on a free-falling asset is not enough to create desire. They argue for more radical deregulation: easing residential development rules in tourist sectors, introducing true timeshare or fractional ownership systems, and creating complexes integrating accommodation, work, and leisure on the model of Japanese “workations.”
When Remote Work and ‘Workation’ Disrupt the Second Home
The pandemic triggered a massive shift in Korea in favor of remote work. The number of employees practicing telework rose from about 66,000 in 2015 to 1.1 million in 2021, a 17-fold increase concentrated in 2020-2021. Large corporations, public institutions, and tech groups (Naver, Kakao, Line Plus, etc.) have launched remote work or flex-office policies, sometimes entirely autonomous.
This movement is not trivial for the South Korean second-home market. In theory, the possibility of working remotely frees employees from the obligation to live in the most expensive neighborhoods of Seoul and opens a window to consider a second place to live, further away, greener, larger.
From Second Home to ‘Multi-Habitat’
Research by the Architecture & Urban Research Institute shows that demand is no longer limited to a “primary residence + vacation home” model. Urban professionals now seek “multi-habitat” solutions: several living spaces used alternately according to professional, family, or leisure needs.
The problem is that the classic model of buying a second home does not mesh well with short, repetitive stays of a few days to a few months. It is financially burdensome to buy a home dedicated to a few weeks of remote work per year, and the supply of flexible furnished rentals remains insufficient in many rural or coastal areas.
Hence the emergence of an ecosystem of “subscription living” platforms and long-term stays that now play a role as a substitute for a second home. Services like Live Anywhere, Stayfolio, Yoohyu, or Dajayo offer stays of one month or more, often in renovated empty houses in small towns or the countryside. Some are growing very fast: one such platform raised 2 billion won and surpassed 600,000 downloads in two years, with a core clientele of women in their 30s and 40s.
Membership for the ADDress platform, which rents vacant houses to remote workers, multiplied sixfold in 2020.
Still Insufficient Material Conditions
For the second home to truly become a support for remote work, a nice view is not enough. Studies emphasize the need for shared workspaces, reliable internet connections, videoconferencing tools, and communal places where workers can meet.
In this area, Japan serves as a model: Nagano Prefecture has transformed closed schools and vacant buildings into mixed-use co-working, accommodation, and leisure spaces, while Wakayama has widely structured a corporate “workation” offer by leveraging the local hotel sector. In Korea, some local initiatives exist, but the supply remains sparse and dependent on local authorities’ ability to repurpose their brownfield sites.
The Jeju Magnet and Mountain Resorts: When the Second Home Rises to Ultra-Luxury
If one region symbolizes the Korean second home, it is Jeju. The volcanic island with a mild climate, long nicknamed the “Hawaii of Korea,” has become both a playground for the affluent classes and a laboratory for tensions between tourist development, soaring prices, and environmental concerns.
Jeju, Playground for Second Homes… and Foreign Investors
Jeju benefits from several undeniable assets. Its status as a special self-governing province allows it to offer investment residency programs; foreigners can freely purchase properties, including land, under a simplified legal framework. The island thus attracts a mix of young remote workers, retirees, affluent families, and foreign investors, notably Chinese, North American, and Southeast Asian.
Over 12.6 million visitors were welcomed on the island in 2023.
The range of available properties is wide, from entry-level condos to ultra-luxury villas sometimes exceeding four million dollars. In the branded residence segment, Jeju stands out with average unit prices close to $1.72 million and a price per square meter around $15,000, roughly four times the average island market price. In other words, a second home on Jeju is no longer just a seaside cottage but increasingly a luxury asset, often backed by hotel services.
Gangwon-do and the Branded Residence Boom
The other major area for high-end second homes is Gangwon-do, a mountainous region concentrating ski resorts, East Sea beaches, and resort towns like Gangneung or Sokcho. The development of residences managed by international brands (Capella, Marriott, Banyan Tree…) has exploded there.
The average selling price of a branded residence unit in this province is $1.99 million.
Table – Average Prices of Branded Residences by Region
| Region | Average Unit Price (USD) | Average Price (USD / m²) | Estimated Premium vs Local Market |
|---|---|---|---|
| Seoul | ~1.83 M | 28,713 | 2–3× |
| Jeju | ~1.72 M | 15,084 | ~4× |
| Gangwon-do | ~1.99 M | 12,629 | 4–6× (up to 12× on some projects) |
| Busan | ~1.48 M | 10,508 | 2–3× |
This touches on the heart of a paradox in the South Korean second-home market: while the state subsidizes the purchase of second homes in declining areas to offload mass unsold inventory at cut-rate prices, ultra-luxury segments are breaking records in a few tourist hubs, with prices sometimes multiplied by six or more compared to the immediate surroundings.
Foreigners and the Second Home: A Demand Driver, A Hot Political Topic
Foreigners remain a minority in the Korean housing stock – about 0.52 to 0.53% of homes – but their visibility in certain key market segments makes it a political issue. As of late June 2024, some 102,477 foreigners owned 104,065 homes in the country; over 93% of them own only one property, but 461 individuals own five or more.
The geographical distribution of these properties echoes domestic dynamics: nearly three-quarters of homes owned by foreigners are located in the capital region, with over 39% in Gyeonggi, 23% in Seoul, and about 10% in Incheon. Jeju and a few major cities like Busan attract mainly for vacation or rental investment purposes.
A Profile Dominated by Chinese and Americans
Statistics show a rapid rise in foreign owners. The total number of foreign owners increased from about 150,000 to over 232,000 in five years, with over 80,000 new entrants. Nationals from 121 countries are now owners, but the market is largely dominated by a few nationalities.
Number of Chinese property owners in France in May 2025, representing 56% of homes owned by foreigners.
In the clearly secondary and luxury segment in Seoul (Gangnam, Yongsan, Seongbuk-dong, Banpo…), some record transactions have been made by foreigners: a 240 m² apartment in Hannam bought for 12 billion won by an American, a luxury villa in Gangnam for 7.4 billion won by a Maltese national, a unit in Banpo Xi paid 7.4 billion in cash by an Uzbek, a single-family house in Seongbuk-dong bought for nearly 12 billion won by a Chinese man in his thirties, or an apartment in Yongsan sold for 18 billion won.
Real estate acquisitions by foreigners in Korea, although not solely determining price dynamics, fuel the debate on “foreign speculation.” This discourse is based on two main arguments: Korean multi-property owners are subject to heavy taxation, while foreigners can more easily escape these punitive brackets, notably by not always being identified as the same household. Furthermore, financing obtained abroad, difficult to control, could circumvent local credit restrictions.
The Regulatory Response: Purchase Permits and Residency Obligations
Under public pressure, the government has chosen an unprecedented path: instituting a system of prior purchase permits for foreigners in the capital region, explicitly motivated by stabilizing the real estate market, and no longer solely by national security considerations as in the past.
Since August 2025, any foreigner wishing to acquire a home in Seoul, in 23 cities in Gyeonggi, or 7 districts in Incheon must obtain prior authorization. The buyer must then move in within four months and reside there continuously for at least two years. Non-compliance with these rules can lead to a fine of up to 10% of the property’s value and the cancellation of the sale.
Financing originating from abroad must be declared within 30 days, with details on the lender and amounts. This one-year trial regime could be extended or tightened; lawmakers have already submitted bills to generalize permit systems and make reciprocity principles public, noting that countries like China prohibit foreigners, including Koreans, from purchasing land.
The stakes for the South Korean second-home market are clear: in the hottest zones, a second home bought by a foreigner is now heavily regulated and must show a real intention of residency rather than pure speculative investment. Conversely, in the declining areas where the state distributes tax benefits, foreigners remain very few, and priority is given to Korean households.
The Japanese Specter: What if a Second Home Becomes an Asset to Flee?
Comparative studies between Korea and Japan carry increasing weight in debates. In Japan, the combination of demographic decline, rising inheritance taxes, and an explosion in the number of empty houses has fostered a true “culture of non-purchase” in the provinces: why acquire an asset that is worth less each year and risks becoming a tax burden for one’s heirs?
Percentage of vacant homes anticipated in Japanese rural areas by 2033 according to some scenarios.
Korea seems to be following a similar trajectory in some provinces. A study by the Korean Institute of Public Finance shows that a 1% drop in the local population already translates, the same year, into a 0.14% drop in real estate prices. Yet, many mid-sized cities are seeing their population decline faster than this threshold.
The Japanese parallel is all the more worrying because wealth holders in Korea are massively exposed to real estate. If second homes in the regions depreciate while value concentrates in Seoul and a few luxury tourist markets, the polarization of wealth risks worsening and fueling lasting social resentment.
Second Homes, Tourist Rentals, and Supplementary Income
Beyond expected capital gains, part of the appeal for a second home rests on the possibility of turning it into an income-generating asset via tourist or seasonal rentals. Here again, the market is highly segmented.
Average price per night for a vacation rental in South Korea in USD.
More detailed figures illustrate profitability in certain key cities. In Busan, Airbnb-type listings number around 8,000 units, with a median occupancy rate of about 61% and an average daily rate around 100,000 won. In Jeju, the 20,000 listings tracked show an average occupancy rate of 42% for a comparable rate. In Haeundae, Busan’s beach district, occupancy rates of 60% and a daily rate around $90 make a second home a sought-after investment vehicle, particularly for Asian foreign investors.
Turning a second home into a rental property triggers several tax consequences: taxation of rental income, re-evaluation of property tax, and capital gains tax upon resale. For non-residents, levies include an acquisition tax (1–3.5%, higher in speculative zones), registration fees, a progressive property tax (up to 4% of value), tax on rental income, and capital gains tax that can reach 45%.
The Second Home as an Ultra-Luxury Product: Co-Ownership, Hotel Management, and Smart Living
At the top of the pyramid, the Korean second home has taken on a completely different face over the past fifteen years, with the rise of “branded residences” – residences managed under a hotel or real estate brand, sold at record prices and integrating services worthy of palaces.
The modern segment of luxury residences in Korea started in 2008 with The Ananti Hotel and its co-ownership model for an affluent clientele. It was later developed by major domestic groups (Lotte, Hanwha Resorts) and then by international brands (Marriott, Banyan Tree, Capella…). These residences frequently offer turnkey rental management programs, allowing owners to use the property a few weeks a year and rent it out the rest of the time with a share of the generated income.
This segment is now valued at several tens of billions of dollars, within a Korean luxury residential market estimated at over $40 billion and poised for double-digit annual growth until the next decade. Second homes hold a strategic place there: Jeju and Gangwon-do are explicitly described as “emerging resort markets,” where domestic demand from wealthy households combines with the interest of some foreign investors attracted by the brand and hotel management.
New environmental standards, like nearly zero-energy buildings and smart cities, are making high-end second homes technological showcases. The clientele now demands advanced home automation, optimized energy management, and personalized services, reinforced by the massive integration of connected devices.
Can a Second Home in Korea Still Be Considered a ‘Good Deal’?
The question is less simple than it seems. On one hand, demographic pressure, land scarcity, and Seoul’s status as a global metropolis fuel price resilience in certain segments. The rental yields for apartments in Seoul, around 4.3% gross on average, remain acceptable for a major developed capital, and medium-term projections bank on moderate annual price growth (2–3%).
Interest rate for new mortgage loans in early 2025, a high level that contributes to making second homes inaccessible.
In the regions, the picture is darker. Prices are falling, but the prospect of a recovery is uncertain, due to a lack of strong economic and demographic engines. Government tax incentives reduce the short-term bill but guarantee neither liquidity upon resale nor protection against a slow erosion of value. Comparisons to Japan remind us that one could very well end up, in twenty years, with an unsellable and costly-to-maintain country house.
New practices like remote work and “workation” are transforming the second home. For some, accumulating stays via specialized rental platforms replaces traditional purchase. For others, it becomes a sophisticated financial product, backed by a hotel brand, offering a promised yield but presenting high risk in case of a downturn in the high-end tourism market.
A Three-Dimensional Game: State, Households, International Capital
Ultimately, the South Korean second-home market is played out among three actors: the state, which uses taxation and regulation as levers for development and stability; households, caught between the desire for wealth and the fear of a bubble; and international capital, sometimes accused of speculation, sometimes courted to finance luxury projects or real estate funds.
The South Korean government applies a differentiated policy by region: it encourages multi-property ownership in deserted areas (like Gyeongju) via tax relief for second homes, while discouraging it in dense metropolitan areas (like Gangnam in Seoul) through confiscatory taxation and credit restrictions for multi-property owners. Thus, a family may be encouraged to buy a second home villa in the provinces but strongly discouraged from acquiring an additional studio in the capital.
On the international front, Korea is among the group of countries tightening foreigners’ access to their residential market – even if it stops halfway to a complete ban like Canada’s or 60% surtaxes like Singapore’s. The new purchase permit regimes in the capital region, enhanced scrutiny of funding sources, and the debate on reciprocity testify to a desire to regain control over price formation, particularly in the luxury segments that attract the most foreign buyers.
For Korean households, a second home is no longer an obvious choice. It can represent a profitable asset in specific markets (like Jeju, beachfront Busan, or certain transitioning neighborhoods in the Seoul area) or serve as a tax lever in declining areas. However, it also constitutes a growing risk in depopulating territories. The key to making these investments attractive again lies less in tax benefits than in revitalizing regions through job creation, infrastructure, and services, to make them desirable places to live once more.
The South Korean second-home market can no longer be summed up as vacation homes: it encapsulates all the country’s tensions between hyper-metropolitanization, aging, wealth inequalities, the rise of remote work, and the reshaping of the state’s role. This is what makes it, for investors and public authorities alike, one of the most sensitive – and most revealing – observation grounds for the future of housing in Korea.
A French business owner around 50 years old, with financial assets already well-structured in Europe, wanted to diversify part of his capital into residential real estate in South Korea to seek rental yield and exposure to the Korean won. Allocated budget: $400,000 to $600,000, without using credit.
After analyzing several markets (Seoul, Busan, Incheon), the chosen strategy involved targeting a newer apartment building in a growing neighborhood like Gangnam (Seoul) or Suyeong (Busan), combining a target gross rental yield of 7–8% – the higher the yield, the greater the risk – and medium-term appreciation potential, with a total ticket (acquisition + fees + possible refurbishment) of about $500,000. The mission included: selection of the city and neighborhood, connection with a local network (real estate agent, lawyer, tax specialist), choice of the most suitable structure (direct ownership or via a local SPC), and definition of a time diversification plan, to manage legal, tax, and rental risks.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
