Listings for Seoul apartments have topped 70,000, rising about 30% in a month. While more landlords are putting homes up for sale under government tax pressure, the jeonse and monthly rent supply sought by tenants is down about 15%.
According to real estate big data platform Asil on Mar. 1, Seoul apartment listings totaled 71,443 as of Feb. 27. That is a sharp increase of 27.3% (15,336 listings) from Jan. 27 a month earlier, when there were 56,107.
Seoul apartment listings surpassed 60,000 on Feb. 7, held in the mid-60,000s through mid-February, and then topped 70,000 on the 25th as more landlords listed homes in hopes of a transaction rebound after the Lunar New Year holiday.
This is analyzed as multi-home owners, feeling the burden of taxes or interest as upward momentum weakens, beginning in earnest to list properties. The government plans to end the deferral of heavy capital gains taxation for multi-home owners on May 9. It is seen that overall apartment listings increased as properties from multi-home owners, who judged they must dispose of homes before then to avoid a tax bomb, flooded the market.
A Seoul-area real estate industry official, identified as A, said, "The fact that Seoul apartment listings rose nearly 30% in a month to exceed 70,000 shows multi-home owners are trying by May 9 to settle balances one way or another to avoid the heavy capital gains tax that can reach as high as 82.5%."
The official said, "Except when they need quick cash, landlords have no intention of slashing prices to sell," adding, "Even if buyers want to purchase, loan regulations make it hard to step in, so listings seem to keep piling up."
In contrast to the glut in for-sale supply, the rental market is suffering a drought of listings. Jeonse listings, which stood at 21,807 on Jan. 27 a month ago, are now 18,605, down 14.7%. Over the same period, monthly rent listings also fell 14.3%, from 20,107 to 17,225.
The decoupling of Seoul apartment for-sale and rental listings is the result of landlords preferring sales over jeonse due to owner-occupancy obligations and tax benefits, combined with tenants wanting to stay put in existing homes amid an uncertain market.
A real estate industry expert, identified as B and requesting anonymity, said, "When one listing comes out for sale, one jeonse or monthly rent listing disappears," adding, "In particular, a significant share of the properties put up by multi-home owners are so-called 'tenanted listings' that had been on jeonse, and when these shift to the sales market, it effectively removes one listing from the rental market."
The expert said, "It is as if the market has pulled forward even the jeonse supply that would have come out two years from now into the current sales market ahead of the end of the capital gains tax deferral," forecasting, "After May 10, even for-sale supply may lock up, making it highly likely that both rental and sales supply will plunge."
A drop in the number of move-ins for newly built Seoul apartments this year is also fanning the rental market drought. According to the jointly released 'Planned move-in volume for multifamily dwellings' by the Korea Real Estate Board (REB) and Real Estate R114, Seoul apartment move-ins this year are projected at 27,158 households, or 58.1% of last year's 46,710. Next year is also expected to see fewer move-ins, at 17,191 households.
A real estate industry official, identified as C, said, "With buying sentiment suppressed by loan regulations, many would-be buyers will remain in jeonse or monthly rentals, so demand will be high while supply is short, and this will deepen," adding, "Starting this year, as Seoul apartment move-ins turn downward, jeonse and monthly rent listings will shrink and rental market prices could rise."