Due to loan regulations and uncertainties in taxation, transactions for apartments in Seoul have declined, particularly in the Gangnam Districts (Gangnam, Seocho, and Songpa). More than 90% of apartment transactions in Seoul last month occurred outside these areas.
On September 7, Ham Young-jin, head of the real estate research lab at Woori Bank, analyzed data from the Ministry of Land, Infrastructure and Transport, revealing that the number of apartment sales in Seoul totaled 2,322 as of the contract date on September 4.
Apartment sales in Seoul increased from 5,373 in January to 8,659 in April and 8,962 in May. However, the numbers dropped to 5,289 in June and 5,800 in July, remaining in the 5,000 range for two consecutive months. While the deadline for reporting actual transactions remains until the end of this month, the recovery in transactions is expected to be limited.
In April and May, there was a surge in transactions as sellers rushed to list properties before the end of the tax exemption for multiple homeowners on May 9. Following that, a combination of mortgage regulations, total household loan limits, the announcement of the August 3 tax reform plan, and two interest rate hikes led both buyers and sellers to adopt a wait-and-see approach.
The decline in transactions has been particularly pronounced for high-priced homes. The proportion of transactions for properties priced between 900 million and 1.5 billion won fell from 31.8% in January to 26.6% in August, while those over 1.5 billion won decreased from 21.07% to 19.08%. In contrast, the share of transactions for properties priced between 300 million and 600 million won rose from 16.97% to 21.32%, and those below 300 million won increased from 3.39% to 5.12%.
The share of apartment transactions in the Gangnam Districts dropped from 12.9% in January to 16.1% in May, reaching a yearly low of 9.1% in August. This decline is attributed to high-net-worth individuals also adopting a wait-and-see stance amid uncertainties regarding the tax reform plan.
Conversely, mid- to low-priced areas such as Seongbuk and Jungnang experienced relatively smaller declines in transactions. As a result, the proportion of transactions outside the Gangnam Districts rose to 90.9%. The ongoing instability in rental prices and a shortage of listings, combined with lower property prices, have contributed to a greater capacity for utilizing loans in these areas.
Ham stated, "Recently, the government announced a plan to raise the basic deduction for comprehensive real estate tax for non-resident homeowners from 900 million won to 1.2 billion won. However, with the final form of the tax reform plan yet to be confirmed and the possibility of further interest rate hikes, the gap in expected prices between buyers and sellers is unlikely to narrow. Therefore, a cooling and contraction in transactions is expected to continue for the time being."
* This article has been translated by AI.
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