Market Stalls as Capital Gains Tax on Multiple Homeowners Resumes

A flyer advertising urgent sales is posted at a real estate agency in Daechi-dong. [Photo by Woo Joo-sung]

Multiple homeowners are facing a resumption of increased capital gains taxes for the first time in four years. Starting today, the tax will apply to those owning multiple properties in designated adjustment areas, with rates ranging from 6% to 45%, plus additional surcharges. For those holding three or more properties, the effective tax rate could reach as high as 82.5%. Our team visited the area just one day before the tax increase took effect.

On the afternoon of May 8, near the Eunma Apartment in Daechi-dong, Gangnam District, the atmosphere was surprisingly calm despite the impending tax changes. While some property listings were visible in agency windows, inquiries and foot traffic were notably sparse.

What was once a market buzzing with last-minute transactions has shifted to a wait-and-see phase after most urgent sales were completed. The owner of a local real estate agency remarked, "Most urgent sales were settled in April. Now, only homeowners looking to raise prices remain. Once the district office closes tomorrow, it will be a case of whatever price they ask for." He added that homeowners are reluctant to list their properties alongside those trying to evade taxes, leading to a trend of waiting until after May 9 to list.

A representative from another agency near Hanbomido Apartments echoed this sentiment, stating, "Almost all properties that were likely to sell have already been transacted. There won’t be many last-minute urgent listings now."

The government allowed multiple homeowners to keep their options open until the last moment. As long as land transaction permit applications were submitted by May 9, homeowners could complete payments and registrations later to avoid the increased tax. On Saturday, May 9, 25 district offices in Seoul and 12 in Gyeonggi Province operated special hours to accept these applications. The deadline for payment can be extended up to six months, providing a final opportunity to avoid a tax burden.

A view of the Gangnam District Office. [Photo by Woo Joo-sung]

However, the Gangnam District Office was also relatively quiet on that day. A separate area for land transaction permits was set up within the real estate information department, but only civil servants handling inquiries were present; no lawyers or applicants were visible. A representative from a law office in Nonhyeon-dong noted, "We were busy with land transaction permit applications a few weeks ago, but that’s not the case now. There may be some last-minute price adjustments, but it doesn’t seem like there will be a sudden influx of applications."

The depletion of urgent sales and withdrawal of listings is reflected in market data. According to real estate big data firm Asil, the number of apartment listings in Seoul as of today stands at 69,175, a decrease of over 10% from 77,010 a month ago. This marks the first time since February 24, when listings were at 68,564, that the number has dropped below 70,000.

In the past month, the area with the largest decline in listings was Guro District, which saw a drop from 2,772 to 2,283 listings, a 17.7% decrease. Other areas in northern Seoul, such as Gangbuk (-16.0%), Seongbuk (-15.8%), and Jungnang (-15.8%), also experienced declines exceeding 15%. This trend is attributed to the completion of last-minute transactions to take advantage of tax benefits, along with multiple homeowners withdrawing listings as they missed their selling window.

With listings depleting, localized price increases are occurring. In outer districts, rising prices are further pressured by real demand stemming from instability in rental markets. According to the Korea Real Estate Agency, apartment prices in Seoul rose by 0.15% in the first week of May, maintaining a strong performance for three consecutive weeks. Areas with significant listing reductions, such as Guro (0.24%), Seongbuk (0.27%), and Gangbuk (0.25%), have outpaced the overall price increase in Seoul, solidifying the market's support level.

A representative from a real estate agency in Sangye-dong, Nowon District, stated, "While urgent sales in mid-priced complexes were cleared out early, steady demand from newlyweds and those moving out due to rental shortages has led to continued inquiries and contracts, pushing prices back to early-year levels since last week."

* This article has been translated by AI.