[Home Tech] Seoul's Popularity, Rising Housing Costs

Foreign international students surpass 300,000
Tourism growth creates incentives to convert homes to short-term rentals
A decline in jeonse and monthly rental homes could intensify upward pressure on rents

Editor's NoteMore than 70% of the assets held by people in Korea are tied up in real estate. A home is both our most important asset and the place closest to us, where we feel most comfortable. We live with so much tied up in our homes, and we bring you the information you need to buy and sell them. The Asia Business Daily publishes [Home Tech] every three weeks with Kim Hyoseon, senior real estate specialist at KB Kookmin Bank, to help readers build the knowledge they need.

After watching the film "Notting Hill," I think first of its small bookshops and narrow streets rather than London's famous tourist attractions. I want to walk past the blue door where the main character lived, have a coffee nearby, and spend a few days living there. The desire to travel inspired by film and culture goes beyond sightseeing; it leads to a wish to experience the daily lives of local residents. For travelers, the homes in residential neighborhoods can become accommodation options alongside hotel rooms. When this demand enters the housing market, tourism growth can lead to changes in the rental market.

It is particularly important to pay attention to additional demand and changes in how homes are used at a time when the burden of both jeonse and monthly rent is growing. An analysis of Seoul apartment price statistics shows that the median jeonse price rose 11.0%, from 509 million won in December 2025 to 565 million won in September 2026. Over the same period, the median monthly rent rose 12.9%, from 1.24 million won to 1.4 million won. The burden of securing a jeonse deposit and the burden of paying rent each month are both increasing. The monthly difference in median rent is 160,000 won, or 1.92 million won annually. The median jeonse and monthly-rent deposit also rose 9.1% over the same period. Median monthly rent and median deposits may be calculated from different contracts, so they cannot be combined to measure the increase in the burden on individual households. However, the fact that both indicators have risen shows that we need to consider both tenants' monthly expenses and the burden of raising a lump-sum deposit.

A property listing is posted at a real estate brokerage in Gangnam-gu, Seoul. Yonhap News.

Demand from foreign residents is adding to a market where the burden on tenants is already rising. According to the Ministry of Justice, 2,783,247 foreign nationals were residing in Korea at the end of 2025, up 5.0% from the previous year. The number of international students, in particular, rose 17.1% to 308,838, an increase of 45,063 in a year. It is no longer possible to view demand from foreign nationals solely as a matter of accommodation for tourists. Growth in the number of international students can change rental demand in university neighborhoods. If universities attract more students without securing enough housing, including dormitories, the additional demand will flow to nearby studio apartments and multi-family and multiplex homes. Demand from international students is added to that of Korean students and young people just starting their careers. This does not mean that foreign nationals pay higher rents than Korean residents, but the addition of tenants in university neighborhoods, where supply is difficult to increase quickly, can itself add upward pressure on rents.

An increase in tourists and short-term visitors can also affect supply. As demand for residential-style accommodation and short-term rentals grows, landlords may compare the returns from these operating models with those from conventional jeonse and monthly-rent leases. Accommodation businesses and residential leases are subject to different requirements. However, if existing jeonse or monthly-rent homes that meet the relevant requirements are converted into accommodation or short-term rentals, tenants looking for a home to live in for an extended period will have fewer options. Even if the total number of homes does not fall, the number available to rent on a jeonse or monthly-rent basis may decrease. If tenant demand, including demand from international students, rises while some jeonse and monthly-rent properties are taken off the market, upward pressure on rents could intensify.

Foreign tourists seen on Myeongdong Street in Seoul. Yonhap News.

Of course, it cannot be concluded that the current rise in apartment jeonse and monthly rents is the result of an increase in foreign nationals. Apartment statistics provide context for the overall increase in rental-market pressures in Seoul, while the effect of demand from foreign nationals on prices must be examined separately by area and housing type. Other factors, including interest rates, new housing supply, and the conversion of jeonse leases to monthly rent, must also be considered together.

However, if demand from foreign nationals expands when the burden on tenants is already high, upward pressure on housing costs is likely to persist in areas where supply is insufficient to meet that demand. The impact may be concentrated in university neighborhoods, areas near tourist attractions, and markets for small homes with good access to workplaces, rather than being felt evenly across Seoul. High advertised prices for short-term rentals do not necessarily mean high returns for landlords. They must also account for furniture and appliances, management costs, commissions, and the risk of vacancies. The incentive to convert a property will be greater in places where short-term rentals are expected to be more profitable than long-term leases, even after these costs are taken into account. Using existing vacant homes can help accommodate new demand, but converting homes used for long-term rentals can reduce the options available to existing tenants. The two cases need to be considered separately.

Policies to attract foreign nationals should therefore be designed together with plans for housing and accommodation supply. Universities should link their efforts to recruit international students with plans to secure housing, while appropriate accommodation supply should be prepared to meet the increase in tourists. It is also necessary to track the volume of short-term rentals by area, lease terms, and the scale of conversions from existing jeonse and monthly-rent homes. Supply measures can be made more specific only when we know where demand from foreign nationals is concentrated and what kinds of spaces they use.

Housing costs in Seoul are becoming harder to explain solely in terms of the number of Korean households and homes. International students are becoming one source of rental demand, while tourists and short-term visitors may change how existing homes are used. If the city cannot provide enough housing and accommodation to meet rising demand, its popularity could translate into higher housing costs for both residents and international students.

Kim Hyoseon, Senior Real Estate Specialist, KB Kookmin Bank Star Advisory Group

This content was produced with the assistance of AI translation services.