Seoul apartment sale transaction volume fell by nearly half in a month. It is seen as the result of transactions shrinking sharply as listings that came to market after the end of the temporary suspension of heavy capital gains taxes on multiple-home owners were pulled back. The government is allowing transactions of so-called "units with tenants" within land transaction permit zones to induce more listings, but the market response has fallen short of expectations.
According to the Seoul Real Estate Information Plaza of the Seoul Metropolitan Government on the 4th, Seoul apartment sale transaction volume (based on contract date) in May was tallied at 4,935. That is a 42% decrease from 8,448 in April. However, considering that the deadline for reporting actual transactions is up to 30 days, the final volume could increase somewhat.
Seoul apartment transaction volume fell to 3,389 in November after the Oct. 15 real estate measures last year, then began to recover this year. In particular, transactions jumped as urgent listings aimed at tax savings flooded the market ahead of the resumption of heavier capital gains taxes on multiple-home owners on May 9. Transaction volumes stayed in the 5,000 range at 5,364 in January, 5,780 in February, and 5,490 in March, then surged to 8,448 in April as last-minute demand rushed in.
Statistics from the actual transaction price disclosure system of the Ministry of Land, Infrastructure and Transport showed a similar trend. Last month, Seoul apartment transaction volume was 4,982, down 43% from 8,593 in April.
Analysts say the feared "transaction cliff" is becoming a reality. As multiple-home owners pull listings due to capital gains tax burdens, the amount of stock available for transactions is shrinking.
According to real estate big data firm Asil, as of the 2nd, Seoul apartment sale listings were tallied at 61,058. That is down 21.9% from the same period in April (78,145) and down 13.9% from the same period in May (70,897). The decline was the steepest among the 17 provinces and metropolitan cities nationwide.
To ease the freeze in listings, the government prepared an exception that allows transactions of dwellings with tenants in place to help non-resident single-home owners sell their existing dwellings. But the market view is that the effect is limited. Many potential buyers are considering moving up to better areas, but recent price gains and tighter lending rules are making it hard to raise funds.
Meanwhile, record-price transactions are continuing in major complexes in Gangnam and along the Han River. In Seocho-gu Banpo-dong, ACRO River Park with an exclusive area of 84㎡ set a new record on the 19th of last month by transacting at 6.3 billion won. That is about 1 billion won higher than the month's lowest actual transaction price of 5.3 billion won. In Seocho-gu Jamwon-dong, Shinbanpo Xi with an exclusive 59㎡ also transacted last month at 3.89 billion won, up about 800 million won from 3.065 billion won in February.
Experts expect the phenomenon of declining transactions and rising prices to continue for the time being. Song Seung-hyeon, head of Urban and Economy, said, "Non-resident single-home owners have little incentive to dispose of their current dwellings," adding, "While demand remains, supply continues to be insufficient, so Seoul apartment prices are likely to keep rising."
The tax reform plan to be announced in July is also not expected to bring major changes to the market. Ko Jun-seok, a professor at Yonsei University's Sangnam Institute of Management, said, "As capital gains tax burdens grow, selling itself has become difficult," adding, "Homeowners are more likely to pass the higher property tax burden on to tenants in the form of rent hikes rather than dispose of their dwellings."