This year, transactions for Seoul's ultra-high-priced apartments over 2.5 billion won fell by more than 60% from last year. Deals for high-end apartments over 10 billion won also dropped sharply. As the loan limit for ultra-high-priced apartments is only 200 million won, effectively requiring buyers to pay entirely in cash, and with the likelihood of heavier property tax burdens growing, transactions appear to have declined.
According to the actual transaction price system of the Ministry of Land, Infrastructure and Transport (MOLIT) and the Rsquare Data Hub on the 28th, from the start of the year through the 26th, apartment sales with a transaction price exceeding 2.5 billion won totaled 1,055. That was down 62% from the same period a year earlier (2,778).
Among them, transactions for high-end apartments priced at 10 billion won or more saw the steepest decline. Transactions for apartments priced at 10 billion won or more plunged 73%, from 15 in January–April last year to four in January–April this year. During the same period, transactions for apartments priced at 2.5 billion won or more but under 5 billion won totaled 951, down 62% from the same period a year earlier (2,476). Transactions for apartments priced at 5 billion won or more but under 10 billion won fell 65%, from 287 to 100.
This year, transactions over 10 billion won took place in Yongsan, Seocho and Gangnam districts. In particular, two transactions occurred at Nine One Hannam in Yongsan District alone. A 244.34-square-meter exclusive-use unit at Nine One Hannam changed hands for 14.04 billion won in January and was sold last month for 15.65 billion won to an individual born in the 1990s.
One transaction in the 10-billion-won range was concluded each in Seocho and Gangnam districts. In Seocho District, Raemian One Pentas in Banpo-dong (191.65 square meters exclusive use) transacted last month for 10 billion won, while in Gangnam District, Shin Hyundai 11th in Apgujeong-dong (183.41 square meters exclusive use) sold for 11 billion won.
As transactions decreased, apartment sale prices in areas dense with expensive apartments also entered a downtrend. According to the April nationwide dwelling price trends released by KB Real Estate, apartment sale prices in Seoul's Gangnam District fell 0.29% this month (as of the survey on the 13th), extending declines for a second consecutive month. Seocho District (0.21%) also saw a slower month-over-month rise, posting a lower home price growth rate than other areas. The "KB Leading Apartment 50 Index," which tracks the top 50 apartment complexes by price, recorded 99.3, down 0.48% from the previous month. As of last month (-0.73%), it turned downward for the first time in 2 years and 1 month since February 2024 (-0.06%).
Analysts say strengthened lending regulations were the biggest factor behind the sharp drop in ultra-high-priced apartment transactions. For a mortgage loan executed with apartments priced at 2.5 billion won or more as collateral, the loan limit is capped at 200 million won. Considering taxes needed to purchase dwellings, such as acquisition tax, buyers effectively have to fund the entire price with their own capital.
Seo Jin-hyeong, a professor in the real estate law and administration department at Kwangwoon University, said, "In the past, as long as the loan-to-value (LTV) ratio was 40%, you could borrow and buy a home, but since last year, as lending regulations under demand-suppression policies have been tightened, buyers need sufficient equity to purchase a home."
In particular, the growing likelihood of heavier tax burdens on ultra-high-priced dwellings, from capital gains tax to property holding taxes (comprehensive real estate tax and property tax), is also seen as reducing transactions of ultra-high-priced apartments. Under the current administration, the possibility of increased tax burdens on ultra-high-priced apartments has been growing. President Lee Jae-myung said on his X (formerly Twitter) account in Feb., "Whether you maintain multiple dwellings, hold non-residential investment dwellings, or own ultra-high-priced dwellings that cost 3 hundred million won per pyeong, that is your freedom," adding, "However, you will not be able to avoid the risks and responsibilities that come with normalizing the abnormal." Following the president's remarks, the government has been preparing plans to overhaul dwelling-related taxes, including holding taxes.
A real estate expert said, "As the end of the temporary easing of the capital gains tax surcharge for multiple-home owners approaches, price-decline transactions are emerging in areas with expensive dwellings," adding, "The more dwellings one holds and the higher the dwelling prices, the greater the perceived burden of holding taxes, which appears to be slowing the transaction market for ultra-high-priced dwellings as well."