Entering an accredited real estate agency in Banpo-dong, Seocho-gu, on the 24th, it was quiet. The representative of this agency, who said, 'The phone was ringing off the hook over the weekend,' noted, 'Today, not a single call came in,' reflecting the atmosphere on the first day of the land transaction permit system.
Seocho-gu has become the first area to require local government permission for real estate transactions after Seoul expanded the land transaction permit zones to include the three districts of Gangnam (Gangnam, Seocho, and Songpa) and Yongsan-gu. Over the weekend just before the permit system took effect (22nd-23rd), there were quite a few buyer inquiries at real estate agencies in Seocho-gu. Since gap investments, which involve purchasing property with a lease, become impossible once designated as a land transaction permit zone, demand concentrated on finding cheaper properties with leases before the system took effect. However, from the day the permit system was implemented, both buyers and sellers have adopted a wait-and-see attitude.
◇Only sales of discounted apartments exhausted…on the contrary, sales prices increased
Transactions made just before the implementation of the land transaction permit system mainly involved apartments priced lower than the market rate, including those with leases. A representative from an accredited real estate agency operating in Banpo said, 'There were many calls over the weekend asking to check listings before the permit system started,' adding, 'Many inquired if there were any quick sales.' He further noted, 'Only a few listings that were either bought in advance for a move to another area or properties being sold for retirement funds were sold.'
However, while there were many inquiries for properties with leases or quick sales for gap investments, it has been reported that transactions were not as plentiful as expected. In the case of quick sales, it was due to specific circumstances of some owners, and it seems that most owners were not in a rush to sell at lower prices. In fact, it was common for prices to increase by 200 million to 300 million won over the weekend.
The representative of a real estate agency in Banpo said, 'There were transactions for properties with tenants, but we have to say that there were hardly any transactions compared to the inquiries,' adding that 'the few contracts made were due to the limited number of properties available for sale.' He noted, 'Now owners are marking prices about 200 million to 300 million won higher than actual transaction prices, and they are withholding sales, saying they won't sell at those prices,' and explained, 'As for buyers, the only listings available for quick sales are those priced high, which is why transactions naturally didn't occur.'
A representative from the B real estate agency also explained, 'Although there are many stories about prices dropping due to quick sales before the permit system, that's not the case in Banpo. People living here don’t have a sense of urgency.' He added, 'There have been reports that a unit in Raemian One Bailey sold for 5.5 billion won, but that was not on the Han River view side, so that price doesn’t indicate a decrease; a similar unit with a Han River view recently traded for over 7 billion won.'
◇The market is in a wait-and-see mode due to the learning effect of the permit system…properties are starting to lock up
The real estate market in Seocho-gu is expected to return to a wait-and-see stance until the end of September, when the permit system is scheduled to be applied. The representative of A real estate agency stated, 'For the time being, there will likely be no transactions, and the market will only be observed.'
As the market returns to a wait-and-see mode, properties are also starting to lock up. According to real estate big data company Asil, the number of apartment listings in Seocho-gu decreased by 3.8% from 7,482 on the day of the announcement of the expanded permit system on the 19th to 7,198 on that day. During the same period, significant decreases in listings were observed in Yangjae-dong (-7.1%), Umyeon-dong (-5.9%), Shinwon-dong (-5.7%), and Banpo-dong (-5.0%).
It is expected that there will not be many apartment listings from owners with high property tax burdens before June. The representative of D real estate agency located in Seocho-gu predicted, 'Despite the rise in official prices, the tax burden is around 10 million won, which will not significantly affect listings.'
However, the real estate market in Seocho-gu is seeing potential for price fluctuations again when the permit system is lifted in September. This is because, following the lifting of the permit system in Jamsil, Samsung, Daechi, and Cheongdam last month, house prices in those areas surged, creating a learning effect. A representative from B real estate agency stated, '(The lifting of the land transaction permit system in Jamsil, Samsung, Daechi, and Cheongdam last time) served as a guideline signaling that when the land transaction permit area is lifted, house prices will rise further,' adding that 'those who own apartments in the land transaction permit zone are aware of this.'
A resident living in Banpo stated, 'There’s no urgency to sell quickly; I will sell at the right price,' noting, 'If the permit system leads to a rise in rental prices, it will naturally drive the sales prices up, and I think I can sell at an appropriate price if I just wait.'
In fact, the trend of rising house prices in areas bound by the land transaction permit system has been consistent. According to Shinhan Investment Corp's Asset Management Consulting Division, when analyzing the transaction volumes of apartments for the two years prior to the enforcement of the land transaction permit system on June 2020, compared to the two years following it (from June 2020 to May 2022), transaction volumes in all four regions saw a decrease.
However, the rise in prices in these regions has continued up to recently. The average apartment transaction price in Jamsil rose from 57.58 million won per 3.3 square meters (1 pyeong) in June 2020 to 78.98 million won last month, a 37.2% increase. The price increase percentages for Cheongdam-dong, Daechi-dong, and Samsung-dong during the same period were 35.3%, 35.9%, and 32.4%, respectively.