South Korea’s real estate market has once again found itself at the center of heated debate and government action as authorities intensify their crackdown on illegal construction, while new housing supply policies struggle to move from promise to reality. Over the past year, a series of investigations, policy announcements, and enforcement drives have exposed the depth and complexity of the nation’s housing challenges—especially in the bustling capital of Seoul and the high-profile Bu-dong San area.
According to a government research report released on August 11, 2025, by the Korea Research Institute for Human Settlements, a staggering 390 cases of illegal construction related to the Jeongbu Industrial Complex were identified between June 2022 and August 2024. Out of these, only 59%—or 230 cases—were actually implemented, while 106 cases (27.3%) showed no progress after their initial announcement. Perhaps most troubling, 41.7% of the cases requiring legal development were found to be noncompliant, with illegal construction periods averaging 204 days and sometimes stretching up to 7.9 months (237 days). The report warns that such delays and noncompliance seriously undermine the effectiveness of regulations and the practical impact of government policy.
This slow pace of implementation is not limited to the Jeongbu Industrial Complex. The government’s broader real estate policy, announced in 2022, initially aimed to balance supply and demand but soon shifted focus toward boosting housing supply. The proportion of supply-driven policies increased from 60.3% in 2022 to 76.1% in 2024. Yet, out of the 279 supply measures announced—including the ambitious 8·16 plan to provide 2.7 million homes—only 154 (55.5%) have been put into practice. Even more telling, just half of the 12 most critical supply measures have seen real-world execution.
Legal reform has proven to be a major stumbling block. The average time from policy proposal to enactment is 204 days, but for tax and maintenance policies, the wait stretches to an average of 218 days, and for maintenance projects specifically, it is 237 days. In stark contrast, financial measures—which typically require less legislative wrangling—are implemented in just over a month on average. The Korea Research Institute for Human Settlements cautioned, "Delays in institutionalization can lead to a decrease in policy effectiveness due to timing mismatches." The institute recommended streamlining procedures or finding alternative approaches for policies dependent on legislative change.
Local governments have been stepping up their own enforcement efforts. According to a report by JoongAng Economy News, Seoul City has analyzed a total of 11,578 cases of illegal construction and new approvals over the past year, uncovering that 63%—a significant majority—were illegal. Last year alone, the city investigated around 8,000 cases, confirming 956 as illegal and imposing fines totaling 26 billion won. In the first half of this year, out of 3,000 cases under investigation, 617 were found to be illegal, leading to a further 37 billion won in fines. The most common violation was delayed reporting, with 1,327 cases failing to notify local authorities within the required 30 days after a real estate transaction. Other notable violations included 222 cases of unreported or falsely reported transactions and 24 instances of falsified transaction prices.
To stay ahead of increasingly sophisticated violators, Seoul’s crackdown now relies on a blend of technology and old-fashioned vigilance. The city employs CCTV cameras, drones, and night inspections to monitor construction sites—especially in the Bu-dong San area, where illegal building activity is concentrated. The city government has also enhanced its real estate data analysis system, aiming to systematically catch irregularities and market-distorting activities. In addition, over 3,600 suspected cases of tax evasion related to real estate transactions have been referred to the National Tax Service for further investigation.
Chon Nam-joon, head of Seoul’s Urban Space Headquarters, emphasized the city’s determination: "We will strengthen investigations and responses to abnormal transactions to enhance the transparency of the real estate market and establish a sound transaction order centered on real demand." This commitment has been echoed by other officials, who point out that the crackdown will continue intensively, especially in areas where violations are frequent. The government’s approach includes expanding cooperation with the Ministry of Land, Infrastructure and Transport, local districts, and the Korea Real Estate Board, forming joint task forces to catch and deter illegal construction.
Meanwhile, the broader housing market is experiencing its own pressures. After five consecutive weeks of slowing price increases following the June 27, 2025, announcement of stricter lending regulations, Seoul’s apartment prices rebounded in early August. According to the Korea Real Estate Board, the average apartment price in the capital rose by 0.14% in the first week of July, up from 0.12% the previous week. Industry experts warn that the cooling effect of the lending restrictions may be short-lived. The Housing Industry Research Institute predicts, "If the government does not come up with fast and strong supply measures, pent-up demand could revive, causing house prices to surge again in the fourth quarter."
In response, the government is preparing to unveil a new supply policy as early as the end of August. The upcoming plan is expected to focus on utilizing idle urban land and aging public facilities, revitalizing redevelopment and reconstruction projects, accelerating the supply of third-generation new towns, and expanding public housing through innovative models such as equity accumulation and profit-sharing. However, experts stress that the success of these measures will depend less on their design and more on their execution. As Park Won-gap, chief real estate expert at KB Kookmin Bank, put it, "A supply policy with secure land and funding, and strong cooperation with local governments, is needed. Especially when using idle land, issues related to relocating public institutions and addressing local residents’ complaints must be resolved. It’s crucial to ensure that policies are effective and not just announced without follow-through."
With the National Policy Planning Committee set to announce the government’s five-year goals and tasks on August 13, the real estate sector is watching closely for signs that the administration can bridge the gap between bold plans and actual progress. The timing of the new supply policy—likely after joint South Korea-U.S. military exercises and possibly delayed until September—adds another layer of uncertainty for a market already on edge.
As the government and local authorities ramp up their efforts to root out illegal construction and implement long-promised supply measures, the coming months will test whether South Korea can finally bring order, transparency, and stability to its housing market—or whether the cycle of announcements and delays will continue to frustrate both policymakers and the public.
