Apartment prices in Seoul's Gangnam area are stirring again around the end of the grace period for heavier capital gains taxes on owners of multiple homes. As quick-sale listings are being snapped up, landlords are pulling listings or raising asking prices again, rapidly flipping market sentiment. Transactions have slowed, but with price expectations growing, analysts say a "holdout market" is reemerging.
According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system on the 17th, an 84-square-meter unit at ACRO River Park in Banpo-dong, Seocho-gu, Seoul, set a record high when it transacted for 6 billion won on Apr. 22. That was up 700 million won from the previous transaction price of 5.3 billion won.
A 170-square-meter unit at Shinhyundai Phase 11 in Apgujeong-dong, Gangnam-gu, changed hands for 8.5 billion won, up 400 million won from the previous transaction. This complex rose to 10 billion won in May last year but fell to 8.1 billion won in Mar. this year. Recently, however, it has turned upward again, and asking prices for listings on the market have surged to around 11 billion won.
The rise in asking prices is spreading across the Gangnam area. An 84-square-meter unit at Raemian One Bailey in Banpo-dong, Seocho-gu, which transacted for 5.45 billion won last month, now has asking prices in the 7 billion won range. The same size traded for 7.15 billion won in Aug. last year. Some listings are priced as high as 7.9 billion won.
An employee at a certified real estate agency in Banpo-dong said, "Most of the quick sales from owners of multiple homes that had to be disposed of before the end of the heavier tax grace period were absorbed by the end of April," and added, "There are many cases where landlords are pulling listings or raising asking prices again." An employee at a certified real estate agency in Jamsil-dong also said, "There have effectively been no new listings since the 9th," and noted, "As only asking prices rise, inquiries from buyers are actually decreasing, raising concerns about a transaction cliff."
The decline in listings is evident. According to the real estate big data platform Asil, as of the 15th, there were 63,874 apartment listings in Seoul, down 6.8% from the 68,495 listings on the 9th, the last day of the heavier capital gains tax grace period. Seocho-gu saw the largest drop, with listings down 10.2% (871 units), while Songpa-gu and Gangnam-gu fell 6.8% (342 units) and 5.1% (500 units), respectively.
Experts say the strength in Gangnam-area home prices is likely to continue for the time being. Seo Jin-hyeong, a professor in the real estate law and administration department at Kwangwoon University, said, "We are seeing a simultaneous decrease in listings, an increase in asking prices, and a rise in jeonse prices," and added, "Even if holding tax burdens grow, in the Gangnam area it is highly likely that owners will hold their listings and continue to expect price gains."