A majority of experts said home prices and jeonse and monthly rent in the Seoul metropolitan area will rise together after May 9, when the grace period for heavier capital gains taxes on 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 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 a 5% rise. Twenty percent predicted flat prices around 0%, and no one said prices would fall.
◇ Some see prices jumping 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 law firm Joyul, said, "With virtually no move-in supply of new apartments, after May 9 most listings with jeonse attached that multiple-home owners put on the market will disappear due to capital gains tax burdens," adding, "The number of people looking to buy homes keeps increasing while supply is shrinking, so prices are likely to rise."
Ham Young-jin, head of the Real Estate Research Lab at Woori Bank, also said, "Rising jeonse and monthly rent are pushing more people to just buy homes, and combined with fewer listings, these supply-demand factors will drive up prices," adding, "However, for the time being, a lockup in listings and a resulting lull in transactions will persist."
This outlook differs considerably from the government's view. The government has maintained that home prices will show a stable trend after the grace period for heavier capital gains taxes ends. On the 4th, Presidential Chief of Staff for Policy Kim Yong-beom also said at a briefing at Chunchugwan, "People are likely focused on what happens if the grace period for heavier capital gains taxes on multiple-home owners ends and a listings lockup occurs," adding, "Strong steps such as the June 27 real estate measures and the Oct. 15 real estate measures, and the government's stance on (real estate) taxation, are being communicated to the market, so wouldn't we see a moderate rise."
◇ No disagreement on rising jeonse and monthly rent
Experts also showed no disagreement about rising jeonse and monthly rent. Forty percent projected "a rise of more than 5%" in Seoul's jeonse and monthly rent prices, and 60% projected "a rise of 1%–5%." For Gyeonggi and Incheon, 30% expected "a rise of more than 5%," and 70% expected "a rise of 1%–5%."
Ko Jun-seok, a professor at Yonsei University Sangnam Institute of Management, said, "With the end of the grace period for heavier capital gains taxes approaching, many multiple-home owners have sold homes they had leased on jeonse, reducing jeonse listings themselves. At the same time, as the land transaction permit system remains in key areas of Seoul and Gyeonggi, gap investing (sales with jeonse attached) for people buying new homes is banned, causing a sharp drop in jeonse listings and pushing up jeonse prices." Ko added, "Not only is there a shortage of apartment jeonse, but people who had lived in villas or multi-family dwellings, which served as substitutes for apartments, also prefer apartments due to the impact of jeonse fraud, so demand for apartment jeonse and monthly rent keeps increasing and will affect the market."
◇ Tax overhaul, including property holding taxes, is the next variable
Experts pointed to tax overhauls such as hikes in property holding taxes and how much the shortage of dwellings supply will worsen as variables that will move the real estate market. In a question allowing multiple answers about the factor that will most affect home prices going forward, 80% of respondents cited "real estate policy such as expanding property holding taxes" and "shortage of dwellings supply." Shin Bo-yeon, a professor in the Department of Real Estate AI Convergence at Sejong University, said, "For non-resident single-home owners and holders of ultra-high-priced homes, how much to raise property holding taxes and when to implement the hikes are the most crucial variables to gauge how the real estate market will move."
On the shortage of dwellings supply, many said it will not be resolved easily and will continue to drive home price increases for a considerable period. Cho Young-gwang, a researcher at Daewoo Engineering & Construction's Big Data Lab, said, "In the past two to three years, housing starts have fallen sharply, and move-ins for the third new towns that would open the way to easing the supply shortage are still years away, so it will not be easy to solve this problem in the short term."
※ Ten experts surveyed (in alphabetical order by Korean last name)
Ko Jun-seok, chief professor at Yonsei University Sangnam Institute of Management; Kim In-man, head of the Kim In-man Real Estate Economy Research Institute; Kim Hak-ryeol, head of 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-hyeong, professor at Kwangwoon University; Shin Bo-yeon, professor at Sejong University; Shim Hyeong-seok, senior fellow at law firm Joyul; Cho Young-gwang, researcher at Daewoo Engineering & Construction; Ham Young-jin, head of the Real Estate Research Lab at Woori Bank