With the return of heavier capital gains taxes on multiple-home owners and an increase in holding taxes looming, a string of urgent listings with asking prices cut by hundreds of millions of won is emerging at major complexes in Seoul's Gangnam area. But actual end users are not looking cheerful. Because of loan restrictions, Gangnam is effectively off-limits, so end users are turning their eyes to the relatively more accessible outskirts of Seoul, such as "No-Do-Gang (Nowon, Dobong, Gangbuk)."
According to the real estate industry on the 14th, apartment listings have recently been increasing along the Han River belt. According to big data platform Asil, as of the 12th, Seoul apartment listings stood at 62,357, up 9.3% from the start of the year. Songpa District in Seoul saw the biggest jump, rising 33.1%. It was followed by Gwangjin District (30.7%), Seongdong District (29.4%), Seocho District (23.3%), and Gangnam District (20.5%), with listings pouring out in areas where apartment prices are high.
In particular, so-called "urgent sales" have appeared in Gangnam with sharply lowered asking prices. In the case of a 110㎡ exclusive unit at Helio City in Garak-dong, Songpa District, a listing came up with the asking price down to 2.9 billion won. Compared with a transaction of the same size at 3.515 billion won in Dec. last year, that is more than 600 million won lower. Apgujeong Hyundai Complex 6 and 7, which last changed hands at a record 8.9 billion won in Jul. last year, now has listings in the low 8 billion won range. An 82㎡ exclusive unit at Apgujeong Hyundai Complex 3 also set a new record at 6.07 billion won in Nov. last year, but a listing has recently appeared offering to sell in the 5.3 billion won range.
The surge in listings with lower asking prices in a short period is driven by the government's tougher rules on multiple-home owners. On the 12th, the government announced "plans to end the deferment of heavier capital gains taxes on multiple-home owners and pursue supplements." The policy ends the deferment of heavier capital gains taxes for multiple-home owners as scheduled on May 9, but includes a measure to reduce capital gains taxes if a sale contract is signed by the deadline and the balance payment and registration are completed within four months in existing regulated areas such as the three Gangnam districts and Yongsan District, and within six months in newly regulated areas. With an exit route opened, multiple-home owners who could not sell due to tenant issues have rushed to list properties. Some expect that the increase in multiple-home owner listings could lead to stabilizing home prices in Seoul.
However, on the ground, people point out that end users without homes find it hard to snap up these listings because lending is blocked. For apartments priced over 2.5 billion won, a mortgage loan is capped at 200 million won, making high-priced Gangnam apartments essentially "pie in the sky." Instead, No-Do-Gang, where prices are relatively lower and end users flock, is still seeing strength in mid- to low-priced apartments. Areas accessible to end users may actually see home prices rise.
Lee, a company employee in their 30s buying dwellings for the first time in life, said, "As soon as the measures were announced, I went straight after work to see apartments under 1 billion won in Nowon District, but the mood was to raise asking prices instead," adding, "No matter how many urgent sales come out in Gangnam, that's their own league, and in the outer areas where people who actually need homes are looking, the warmth of an upcycle is just beginning to spread."
Indeed, record-high prices are appearing one after another on Seoul's outskirts. A 84㎡ exclusive unit at Taereung Harrington Place in Gongneung-dong, Nowon District, set a new record last month with a transaction at 1.195 billion won (12th floor). That is 35 million won higher than the previous high of 1.16 billion won (15th floor) in Nov. last year. Raemian Gireum Centerpiece in Seongbuk District also set a record with a 59㎡ unit transacting at 1.41 billion won (9th floor) on the 30th of last month.
Transactions are also active. An analysis by ZIGBANG CO. of applications for land transaction permits in the two weeks before and after Jan. 23, when President Lee Jae-myung said the deferment of heavier capital gains taxes on multiple-home owners would end, showed that Dongjak District saw the largest increase, from 99 to 154. It was followed by Seongbuk District (244→292), Nowon District (491→532), Yangcheon District (142→176), and Dobong District (106→134), mostly on Seoul's outskirts. In contrast, Gangnam District (119→97) decreased.
A licensed real estate agent in Dobong District, Seoul, said, "During the Moon Jae-in administration, people would buy without even seeing the home, just by phone, but now, because end users are the ones trying to buy, they first see the home and then decide," but added, "Sellers also are not yet trying to cut prices to sell quickly; the mood is to watch the market and get the right price, so it seems unlikely that home prices will fall right away."