Apartment prices in Seoul's Gangnam and Seocho districts have continued to decline for a month following the government's tax reform announcement. Concerns over increased tax burdens on high-end properties have led to a 0.41% drop in Gangnam and a 0.23% decrease in Seocho, while areas like Seongbuk, Jungnang, and Nowon have seen increases of around 0.5%.
According to the Korea Real Estate Agency's report on weekly apartment price trends for the fifth week of August, the apartment sales price index in Seoul rose by 0.22% as of August 31, a decrease from the previous week's increase of 0.29%. Nationwide, prices increased by 0.09%, with the metropolitan area rising by 0.17% and provincial areas by 0.01%.
While overall prices in Seoul continued to rise, the Gangnam area showed significant weakness. Gangnam saw a 0.41% decline, particularly in major complexes in Apgujeong and Daechi-dong, while Seocho dropped by 0.23%, mainly in large complexes in Banpo and Jamwon-dong. Songpa also experienced a minimal increase of just 0.01%, resulting in a 0.12% decline in the southeastern region, which includes the four districts of Gangnam.
Since the government announced the tax reform plan on August 3, apartment prices in Gangnam and Seocho have fallen for four consecutive weeks. At that time, the government proposed raising the basic exemption for comprehensive real estate tax for primary homeowners from 1.2 billion won to 1.4 billion won, while lowering it for non-resident homeowners to 900 million won and increasing the tax burden cap from the current 150% to 200%.
However, the day after the survey date, on September 1, the government partially revised the original plan. It decided to maintain the current exemptions of 1.2 billion won and the 150% cap for non-resident homeowners, while keeping the increase for primary homeowners at 1.4 billion won.
This data reflects market reactions prior to the confirmation of the revised plan. The Korea Real Estate Agency noted that while some properties in redevelopment areas were sold at lower prices, contracts for smaller apartments and those near subway stations or large complexes were still being signed at higher prices.
In mid-range areas of Seoul, significant price increases were observed. The 14 districts in Gangbuk rose by 0.36%. Seongbuk saw a 0.54% increase, particularly in large complexes in Donam and Jeongneung-dong, while Jungnang rose by 0.52%, mainly in key complexes in Shinnae and Junghwa-dong. Nowon increased by 0.50%, and Gangbuk and Gangseo both rose by 0.45%. Gwanak increased by 0.43%, Dongdaemun by 0.42%, and Guro by 0.41%.
Among Seoul's 25 districts, 23 experienced price increases, but only Yongsan, Seongdong, and Dongdaemun saw significant rises. Eighteen districts had reduced increases, while Gangnam and Seocho experienced larger declines.
Nam Hyuk-woo, a researcher at Woori Bank's real estate research institute, explained, "Due to policy uncertainties and high interest rates, the three districts in Gangnam are experiencing a downturn, while mid-range areas in Seoul and southern Gyeonggi are showing stable price trends."
He added, "If buyers looking to move to Gangnam list their existing homes for quick sales, nearby areas may also experience delayed price adjustments. However, since the majority of buyers in mid-range areas are first-time homebuyers, there is a possibility of a decoupling trend continuing."
The nationwide apartment rental price index rose by 0.10% from the previous week. The metropolitan area increased by 0.18%, Seoul by 0.21%, and provincial areas by 0.04%.
In Seoul, Gangnam saw a 0.13% drop, particularly in Daechi and Apgujeong-dong, while Seocho fell by 0.10%, influenced by the influx of new units in Jamwon and Banpo-dong. In contrast, Seongbuk and Gangbuk rose by 0.38% each, Nowon by 0.37%, and Seongdong and Dobong by 0.32% each.
* This article has been translated by AI.
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