With the imposition of heavier capital gains taxes on owners of multiple homes taking effect on May 10 and the government preparing to announce a tax reform plan centered on raising holding taxes at the end of this month, Seoul apartment transactions in June fell sharply from the previous month.
According to the actual transaction price disclosure system of the Ministry of Land, Infrastructure and Transport on the 19th, apartment sale contracts in Seoul in May totaled 8,739. That is the highest figure this year. Based on contract dates, the tally excludes canceled contracts and purchases by public institutions that could distort the statistics to clarify market conditions.
In the Seoul apartment market, the government exempted owners of multiple homes from heavier capital gains taxes on the condition that they applied for land transaction permits by May 9 to induce sales, concentrating end-period transactions in April (8,641 cases) and May. Applications rushed in before the deadline were reviewed by local governments, and a large number of contracts were finalized in mid-to-late May.
However, the market mood reversed in June. Some units that signed preliminary contracts before the 9th of last month were carried over and reported in June, but as of the day, the number of Seoul apartment sale reports in June stood at 4,783. That is only 54.7% compared with May's results.
Although the deadline for reporting transactions remains until the end of this month, considering the current trend, observers say June's final transaction volume will fall below 60% of May's. Sale reports already being filed for July total just 1,287, suggesting a further decline from June.
As buying and selling slowed, the listings on the brokerage market themselves disappeared. According to tallies from the real estate asset management platform Asil, as of the day, the total number of apartment listings in Seoul was 60,768, down 11.3% from May 9 (68,495), just before the heavier capital gains tax measure. That is because homeowners withdrew the listings they had put on the market to avoid the tax hike.
By area, the decline in transactions was pronounced in Gangnam and along the Han River, where high-priced dwellings are concentrated. In Gangdong District, sales fell from 466 in May to 155 in June, a 66.7% drop, the steepest decline. Yongsan District also recorded 54 last month, down 64.7% from the previous month (153). Seocho District has only 154 reported so far, a 60.1% decrease, while ▲ Songpa (-59.8%) ▲ Guro (-59.7%) ▲ Dongjak (-58.8%) ▲ Jongno (-57.8%) ▲ Gangnam (-56.2%) and most other key Seoul districts posted results at half or less.
By contrast, areas with many mid- to low-priced complexes or major redevelopment catalysts were relatively less affected. Yeongdeungpo District declined from 312 in May to 235 in June, the smallest drop (24.7%) in Seoul. Next were ▲ Nowon (-26.3%) ▲ Dobong (-26.8%) ▲ Yangcheon (-31.3%) ▲ Eunpyeong (-34.7%), which also saw comparatively smaller decreases.