How Seoul's Housing Crisis Got This Bad: A Decade of Missteps, Market Swings and Political Chaos

Seoul apartment prices have tripled in real terms since 2010, and the Lee Jae-myung administration is now inheriting a market so distorted by successive policy reversals that even ministry officials privately admit they are starting from scratch. The average sale price of a 84-square-metre apartment in Gangnam-gu crossed 2.1 billion won last month, according to Korea Real Estate Board transaction data, a threshold that puts homeownership beyond reach for virtually any household relying on wages alone.

The timing matters. Lee's Democratic Party of Korea swept into government on promises of structural reform after the Constitutional Court upheld Yoon Suk-yeol's impeachment in early 2025. Housing was central to that mandate. But the window for legislating serious change is narrowing: local elections land in June 2026, and the fiscal space to subsidise construction or expand public housing has already been squeezed by defence spending increases tied to the ongoing North Korean missile programme. The policy choices made in the next six months will shape who can afford to live in the capital for a generation.

Fifteen Years of Policy Whiplash

The roots of the crisis run back to the early 2010s. Under Park Geun-hye, the government effectively halted urban redevelopment in older districts by imposing strict preservation orders on so-called vitalisation zones, areas like Mapo-gu's Mangwon-dong and Seongbuk-gu's Mia neighbourhood, where ageing low-rise housing stock was deemed culturally significant. Supply dried up. Prices in adjacent areas like Mapo-gu's Hapjeong and Seodaemun-gu's Yeonhui-dong climbed steadily as young professionals chased the limited inventory.

Then came the Moon Jae-in administration's 28 separate housing-policy packages between 2017 and 2021. The measures included loan-to-value caps, transaction taxes that pushed 70 percent on short-term flips, and a designation-heavy system that labelled almost every desirable district a 'speculative overheating zone.' The intent was to cool demand. The effect was to strangle supply further while gifting existing owners enormous untaxed gains. The Korea Development Institute calculated in 2022 that the Moon-era packages collectively reduced new housing permits in Seoul by roughly 18 percent over five years.

Yoon reversed almost all of it. His government scrapped the overheating-zone designations for 14 districts in a single announcement in January 2023, cut acquisition taxes, and fast-tracked rezoning in the Gangnam 3-gu corridor, Gangnam-gu, Seocho-gu and Songpa-gu, through a programme called the Housing Supply Revitalisation Plan. The Seoul Metropolitan Government under Mayor Oh Se-hoon simultaneously pushed the 2040 Seoul Urban Basic Plan, which raised permissible floor-area ratios near subway stations and greenlit high-rise clusters along the Han River. Prices, briefly flat, surged again within eight months.

What the Lee Government Is Working With Now

The Democratic Party government's flagship proposal is the Public Housing Supply Expansion Act, which cleared its first committee reading in the National Assembly in May 2026. It calls for 150,000 new public rental units nationwide by 2030, with roughly 40,000 earmarked for Seoul. The Korea Land and Housing Corporation, known as LH, has been tasked with acquiring sites in Eunpyeong-gu and Dobong-gu, districts with better land economics than the southern precincts, but LH is still rebuilding institutional credibility after its 2021 internal land-speculation scandal led to the dismissal of 20 employees and a National Assembly investigation.

Meanwhile the Mapo-gu and Yongsan-gu redevelopment zones, some of which have been stalled in legal and administrative limbo since 2015, remain unbuilt. Residents in Changcheon-dong, a dense pocket of single-storey homes behind Sinchon station, have been waiting on a district-unit plan approval for nine years. The Seoul Housing and Communities Corporation estimates that clearing the existing backlog of stalled redevelopment approvals could add 23,000 units to the market within four years, without a single new site being identified.

The immediate test comes this autumn, when the Ministry of Land, Infrastructure and Transport is due to release revised loan-to-value guidance for first-time buyers. Analysts at Shinhan Investment Corp expect the rules to loosen lending for households earning under 70 million won annually. That would help buyers in Dobong-gu and Nowon-gu, where prices remain comparatively lower, but it will do nothing by itself to bring Gangnam-gu back to any definition of affordability. The structural problem, not enough homes in the places people want to live, took fifteen years to build. Fixing it will take longer than any single administration's term.