A majority of experts said home prices and jeonse and monthly rent in the greater Seoul area will rise together after May 9, when the grace period on heavier capital gains taxes for multiple-home owners ends. They also expected a shortage of listings and a lull in transactions to continue for the time being.
On the 8th, a ChosunBiz survey of 10 real estate experts on the market after the 9th found that all respondents expected Seoul apartment prices to rise. In particular, two people (20%) projected apartment prices would jump more than 5%. For apartment prices in the greater Seoul area, including Gyeonggi and Incheon, 70% of respondents expected a 1%–5% rise, and 10% expected more than 5%. Twenty percent forecast prices would be flat around 0%, and no one said prices would fall.
◇ Some expect "home prices to jump more than 5%"
Experts cite fewer listings and the resulting supply-demand imbalance as the main drivers of rising home prices. Shim Hyeong-seok, senior fellow at the law firm Joyul, said, "With virtually no move-ins for newly built apartments, after May 9 most listings with jeonse attached that multiple-home owners had put on the market will disappear because of the capital gains tax burden," adding, "The number of people trying to buy homes keeps increasing, but supply is shrinking, which is likely to push prices higher."
Ham Young-jin, head of the Real Estate Research Lab at Woori Bank, also said, "As jeonse and monthly rent rise, more people are deciding to buy homes outright, and combined with the decrease in listings, these supply-demand factors will drive up home prices," adding, "However, for the time being, the shortage of listings and the resulting lull in transactions will persist."
This outlook differs notably from the government's. The government has maintained that home prices will show a stable trend after the grace period on heavier capital gains taxes ends. On the 4th, Kim Yong-beom, the presidential chief of staff for policy, also said at a briefing at the Chunchugwan press center, "People are likely focused on what happens when the grace period on heavier capital gains taxes for multiple-home owners ends and a shortage of listings occurs," adding, "Strong measures such as the June 27 real estate policy and the Oct. 15 real estate policy, as well as the government's stance on real estate taxation, are being conveyed to the market, so wouldn't we see a gentle rise?"
◇ No disagreement on jeonse and monthly rent increases
Experts also agreed on rising jeonse and monthly rent. Forty percent projected "more than a 5% increase" in Seoul's jeonse and monthly rent, while 60% forecast a "1%–5% increase." For Gyeonggi and Incheon, 30% projected "more than a 5% increase," and 70% expected a "1%–5% increase."
Ko Jun-seok, a professor at Yonsei University's Sangnam Institute of Management, said, "Ahead of the end of the grace period on heavier capital gains taxes for multiple-home owners, many sold homes they had been leasing out on jeonse, which has reduced jeonse listings themselves. With the land transaction permit system maintained in key areas of Seoul and Gyeonggi, new buyers are also barred from gap investing (purchases with jeonse in place), causing a sharp drop in jeonse listings that will push up jeonse prices." Ko added, "There is already a shortage of apartment jeonse, and people who lived in villas or multi-family dwellings, which had served as substitutes for apartments, now prefer apartments because of the impact of jeonse fraud, so demand for apartment jeonse and monthly rent keeps growing and this will affect the market."
◇ Next variable: tax overhaul including holding taxes
Experts cited tax overhauls such as higher holding taxes and the severity of the shortage of dwellings supply as variables that could move the real estate market. In a question allowing multiple responses on what factor will have the biggest impact on future home prices, 80% of respondents chose "real estate policy such as expanding holding taxes" and "shortage of dwellings supply." Shin Bo-yeon, a professor in the Department of Real Estate AI Convergence at Sejong University, said, "How much holding taxes are raised for non-resident single-home owners and owners of ultra-high-priced homes, and when those increases take effect, are key variables for gauging how the real estate market will move."
On the shortage of dwellings supply, many said the issue will not be easily resolved and will continue to support rising home prices for a considerable period. Jo Young-gwang, a researcher at Daewoo Engineering & Construction's Big Data Lab, said, "Groundbreakings have dropped sharply over the past two to three years, and move-ins for the third new towns, which were supposed to open the way to resolving the supply shortage, are still years away, so it will be difficult to solve this problem in the short term."
※ Ten experts surveyed (in Korean alphabetical order)
Ko Jun-seok, chief professor at Yonsei University's Sangnam Institute of Management; Kim In-man, head of the Kim In-man Real Estate Economy Research Institute; Kim Hak-ryeol, head of the Smart Tube Real Estate Research Institute; Park Won-gap, senior fellow at KB Kookmin Bank; Park Hap-su, adjunct professor in the Department of Real Estate at Konkuk University; Seo Jin-hyung, professor at Kwangwoon University; Shin Bo-yeon, professor at Sejong University; Shim Hyeong-seok, senior fellow at the law firm Joyul; Jo Young-gwang, researcher at Daewoo Engineering & Construction; Ham Young-jin, head of the Real Estate Research Lab at Woori Bank