As the government recently confirmed the end of the grace measure suspending the heavy capital gains tax on multi-homeowners, sellers' advantage has narrowed in Seoul's southeastern region, including the three Gangnam districts (Seocho, Gangnam, and Songpa).
According to the Korea Real Estate Board (REB) on Feb. 8, the apartment sales supply-demand index in Seoul's southeastern region for the first week of February (as of Feb. 2) was 101.9, falling for the second straight week. It is the lowest in 21 weeks since the first week of September last year (101.9).
The sales supply-demand index quantifies the balance of demand and supply. The lower it is than the baseline (100), the more people there are trying to sell than to buy in the market.
The sales supply-demand index in the southeastern region, which includes the three Gangnam districts and Gangdong District, is still above the baseline, but it is lower than the overall Seoul average (105.4).
In the southwestern region, which includes Gwanak District where weekly price gains have been large recently, the sales supply-demand index for the first week of February was 108.4, and the northwestern region (Eunpyeong, Seodaemun, and Mapo districts) reached 107.3, with the sellers' advantage expanding since last month.
After President Lee Jae-myung repeatedly confirmed that there would be no extension of the grace period suspending the heavy capital gains tax on multi-homeowners, which sunsets on May 9, some urgent listings from multi-homeowners in the Gangnam area worried about the tax burden appear to have affected supply-demand trends. Expectations that moves to revise property holding taxes will become visible after the June local elections also contributed to the increase in listings.
According to real estate big data firm A-Sil (Apartment Actual Transaction Price), as of the previous day, listings in Songpa District (4,185) jumped 24.5% from a month earlier, the steepest rise in Seoul. Seocho District (6,962) ranked fourth with 16.1%, and Gangnam District (8,348) ranked fifth with 15.4%.
Nam Hyeok-woo of the Woori Bank Real Estate Research Institute said, "In some areas of the three Gangnam districts and the Han River belt, listings are expected to increase," adding, "Since 2018, the market has shifted to one 'solid' home for single-homeowners or two reasonably 'solid' homes for multi-homeowners, and in these areas, multi-homeowners tend to have sizable capital gains due to price increases."
Nam added, "If heavy taxation on capital gains is implemented, not only will the tax burden surge, but future strengthening of property holding taxes will inevitably have an impact, so there is a high likelihood that preemptive listings to realize gains will come to market for the time being."
However, even if listings appear in the southeastern region with reduced asking prices, the prices themselves remain high, and because the Oct. 15 measures last year capped mortgage loan limits for dwellings over 2.5 billion won at 200 million won, analysts say it will be difficult for demand to flock rapidly to this area.