The 2026 real estate market faces headwinds and tailwinds. The economic growth rate is expected to be somewhat higher than in 2025, but the recovery in domestic demand looks likely to be slow. On top of that, as the number of new apartment move-ins directly tied to home prices declines, the supply-demand imbalance is likely to intensify.
Another factor keeping the market on edge is the possibility that the government's tax reform debate could get into full swing after the June 2026 local elections. The acceleration of the shift to monthly rent due to the jeonse crunch and a slump in commercial properties caused by the climate crisis and changing consumption patterns are also expected to weigh on the market's trajectory in 2026. The Construction & Economy Research Institute of Korea forecast nationwide apartment prices to rise 0.8% in 2026 and those in the greater Seoul area to rise 2%, while the Korea Institute of Construction Policy also presented a similar outlook (2% rise in the greater Seoul area). Considering inflation, this effectively means standing still. I believe that even if home prices in Seoul and the greater Seoul area continue to rise in 2026, the pace of increase will slow. The provinces have a high probability of moving from a prolonged slump into an early recovery.
Tax reform, the key watershed for the new year's market
In 2025 alone, three rounds of measures were implemented—June 27 loan regulations, Sept. 7 supply expansion, and Oct. 15 expansion of land transaction permit zones—but the market was not fully tamed. If instability centered on Seoul's Gangnam area continues into the new year, expectations are mounting that the government will pull tax reform as its last card.
As President Lee Jae-myung publicly pledged on the campaign trail not to "use taxes to control home prices," the government has little choice but to be cautious. The backlash triggered by excessive tax pressure during the Moon Jae-in administration also cannot be ignored. For these reasons, rather than directly touching tax rates, the government is more likely to first deploy "fine-tuning tax hikes," such as raising the realized official appraisal price or the fair market value ratio (fair value). Currently, the officially assessed prices of multifamily dwellings are about 69% of market prices, and the fair value ratio used to calculate the tax base for the comprehensive real estate tax is 60% for single-home owners. In effect, the actual tax base is only 41% of market prices. Even without raising tax rates, simply adjusting these ratios can produce a de facto tax increase. The fact that this is possible through an enforcement decree revision alone also reduces the government's burden.
Whether to extend again the temporary suspension of heavier capital gains taxes on owners of multiple homes (set to end in May 2026) is also a key point to watch. If the suspension ends, some owners may rush to sell before it expires, increasing listings. Conversely, if the special long-term holding deduction for single owners of high-priced homes (up to 80%) is reduced, it could deal a direct blow to demand for the "one smart home."
Economic chiefs have recently reiterated the classic principle of raising holding taxes and lowering transaction taxes. However, given Korea's rapidly aging population structure, a hike in holding taxes can be expected to face significant backlash. As of 2024, those aged 60 or older accounted for 57% of comprehensive real estate tax payments. The government's mix of tax adjustments will determine the direction of market sentiment in 2026.
Will a jeonse crisis hit?
In 2026, the jeonse shortage could become serious. Due to various policies, the supply of jeonse listings is shrinking, and real estate agencies now say jeonse listings are scarce. This phenomenon has emerged due to multiple variables, including policy.
Since the July 2020 implementation of the "two housing lease laws (right to request contract renewal and caps on increases for jeonse and monthly rent)," existing tenants have used the renewal right to stay longer, sharply reducing the volume of jeonse circulating. In addition, the June 27 loan regulation added a condition that "if you take out a loan to buy a home, you must move in within six months," reducing purchases for investment purposes. The room to put homes up for rent has also narrowed.
The expansion of land transaction permit zones, implemented starting Oct. 20, also affects the jeonse market. Currently, to buy an apartment anywhere in Seoul and in 12 areas of Gyeonggi Province (including Gwacheon, Gwangmyeong, Bundang District in Seongnam, and Yeongtong in Suwon), you must live there for at least two years, meaning you cannot rent it out even if you buy—and that translates into fewer jeonse units. Making matters worse, demand has been flocking to apartments due to the fallout from jeonse fraud in low-rise apartments. There are also more cases of single owners of high-priced homes who previously rented out their own homes and lived in jeonse themselves to receive the special long-term holding deduction for capital gains taxes now moving back into their own homes. Overlapping factors like these could intensify the jeonse shortage. With an absolute lack of listings already, even a small shock could roil the market.
Provinces begin to close the gap with the greater Seoul area in earnest
Until the end of 2021, the greater Seoul area and the provinces moved in sync, but that trend broke afterward. Due to a glut of unsold units, outflow of young people, and local economic slumps, the provinces have been moving independently from Seoul and its suburbs. However, in 2026, the provincial apartment market, mired in a slump, is expected to stir. As transactions increase, some prices are also expected to recover.
One primary reason the provincial real estate market is showing signs of bottoming out is that it was excluded from loan regulations. The provinces were left out of the June 27 loan regulations, and the three-step debt service ratio (DSR) stress test implemented since July was deferred for six months. Also starting in 2026, the number of move-ins in the provinces will decline, and election pledges—such as capital gains tax and comprehensive real estate tax benefits for unsold dwellings after completion, the completion of Sejong City, and the second transfer of public corporations to the provinces—cannot be ignored. Among these, the second transfer of public corporations has the effect of "southward migration" of solid housing demand from the greater Seoul area. According to KB Real Estate statistics, while the greater Seoul area suffered from house-poor distress in 2011, apartment transaction prices in the five major metropolitan cities in the provinces jumped 20.3%. That was because expectations surged for innovation city development and the transfer of public corporations.
However, the provincial apartment market should be approached by distinguishing between unsold new units and existing apartments. Otherwise, optical illusions may arise due to differences in market temperature. It appears that after prices of existing apartments recover, unsold units will gradually clear. Conditions vary by region, but many provincial markets are likely to recover while narrowing the gap with the greater Seoul area. However, because the market's fundamentals are not strong, the pace is expected to be slow.
2026 is the year to find distress sales
For home seekers preparing to buy in 2026, the focus should be on the price of individual listings, not statistical market averages. Market averages generally move slowly. It is always individual listings that change the direction of prices. When the price of a particular listing suddenly drops, or when scarce listings get snapped up quickly, a signal for reversal is formed. In the new year's market, the ability to read listing movements will matter more than ever. The core of a homebuying strategy ultimately lies in listings—especially the ability to scout distress sales. Set a search zone covering at least 10 buildings and 50 complexes, and establish a trust-based network with local agents in advance. To seize opportunities, put in the legwork on-site and visit agencies frequently to gather information. It is also a good idea to present your desired price range in advance and ask to be contacted first when a listing appears. In your preferred residential area, review multiple candidate dwellings at the same time and, within your budget, identify the cheapest listing among them. Particularly for busy office workers, you should find a compromise in the order of "proximity to work (within one hour) → proximity to a subway station → price." Good locations carry strong asset value, and homes bought cheaply will reward you with higher returns during recoveries.