Second Half 2025 Real Estate Market Outlook: Interest Rate Decline and Policy Changes Create New Variables

Market Dynamics Shift in Second Half 2025

South Korea's real estate market enters the second half of 2025 with significant momentum changes driven by anticipated interest rate reductions and evolving government housing policies. Industry analysts project that these combined factors will create new market dynamics that could reshape property investment patterns and housing accessibility.

Interest Rate Environment and Monetary Policy

The Bank of Korea has signaled potential interest rate adjustments in response to stabilizing inflation and changing economic conditions. Current base rates of 3.5% may decrease by 0.5-0.75 percentage points before year-end, significantly impacting mortgage affordability and real estate investment calculations. Financial sector analysts anticipate that reduced borrowing costs will increase purchasing power for both residential buyers and commercial property investors. Major commercial banks have already begun adjusting mortgage product offerings in anticipation of monetary policy changes.

Government Policy Framework Changes

The Ministry of Land, Infrastructure and Transport has announced comprehensive policy adjustments targeting both housing supply increases and market stability. New construction permits have been expedited for metropolitan area development projects, while local governments receive enhanced authority for housing policy implementation. Tax policy modifications include adjusted acquisition taxes for first-time homebuyers and revised capital gains calculations for property investors. These changes are designed to balance market accessibility with investment activity regulation.

Regional Market Variations and Trends

Seoul metropolitan area property markets show divergent trends, with central districts maintaining premium valuations while suburban areas experience more moderate price movements. Gangnam and Seocho districts continue attracting investment interest despite regulatory constraints. Secondary cities including Busan, Daegu, and Gwangju are experiencing increased investor attention as Seoul market entry costs rise. These regional markets offer improved affordability while benefiting from infrastructure development investments.

Investment Market Considerations

Real estate investment trusts (REITs) are attracting increased attention from both institutional and individual investors seeking property market exposure without direct ownership responsibilities. REIT performance has shown resilience during market uncertainty periods. Foreign investment in Korean real estate shows cautious optimism, with international investors monitoring policy developments and market conditions. Regulatory clarity regarding foreign ownership continues supporting investment decision-making.

Original Korean Article: https://trendy.storydot.kr/realestate/