The government has hinted it may strengthen holding taxes on ultra-high-priced single dwellings, but record-price apartment transactions are continuing in Seoul's three Gangnam districts (Gangnam, Seocho and Songpa). After the heavier capital gains tax on multi-homeowners was reinstated in May, listings decreased, but demand from buyers with ample cash for a "smart single home" has persisted. In Apgujeong, a 182-square-meter apartment sold for 11.25 billion won, and in Banpo, a 168-square-meter unit sold for 13 billion won.
According to the actual transaction price disclosure system of the Ministry of Land, Infrastructure and Transport, a 182-square-meter unit at "Shinhyundai 12th" in Apgujeong-dong, Gangnam District, Seoul, was transacted for 11.25 billion won on the 4th, setting a record high. The same size traded for 11 billion won in April, raising the top price by 250 million won in three months.
A 183-square-meter unit at "Shinhyundai 11th" in Apgujeong-dong also traded for 10.5 billion won on the 13th. Compared with a same-size apartment that sold for 9.4 billion won on June 16, the transaction price rose by 1.1 billion won in less than a month.
Ultra-high-priced transactions also continued in Seocho District. A 168-square-meter unit at "Raemian One Bailey" in Banpo-dong set a new record at 13 billion won on the 12th of last month. On the 29th of the same month, a 178-square-meter unit at "ACRO River Park" in Banpo-dong sold for 9.8 billion won. A 107-square-meter unit at "Shinbanpo 19th" in Jamwon-dong also transacted for 4.05 billion won on May 8.
Starting May 10, the government reinstated the heavier capital gains tax applied when multi-homeowners sell dwellings in regulated areas. The intent was to draw listings from multi-homeowners into the market before the end of the grace period to cool the upward trend in home prices.
According to real estate big data firm Asil, as of the 22nd, Seoul apartment sale listings stood at 60,704, down 21.4% from 77,177 on Mar. 31. Among the three Gangnam districts, Seocho District saw the largest drop, with listings down 22.2%. Songpa District and Gangnam District fell 13.3% and 6.2%, respectively.
Nam Hyeok-woo of the Woori Bank Real Estate Research Institute said, "Since the heavier capital gains tax took effect, listings have remained locked up in Gangnam," adding, "Listings are down, but demand from cash-rich buyers for a 'smart single home' in prime areas remains, so record-price transactions appear to be occurring mainly for mid-to-large sizes."
Even after discussions to toughen holding taxes on ultra-high-priced dwellings gathered steam, the share of high-priced dwelling transactions did not change much. According to the actual transaction price disclosure system of the Ministry of Land, Infrastructure and Transport (MOLIT), there were 13,143 reported apartment transactions in Seoul from May 10 to the 22nd. Of these, 643 transactions were at 3 billion won or more, accounting for 4.9% of the total. That is similar to last year, when 4,244 of 83,777 apartment transactions in Seoul were at 3 billion won or more, or 5.07%.
A real estate expert said, "Even if the burden of holding taxes increases, it suggests that many high-net-worth individuals believe home price gains will outpace the tax increase," adding, "Tougher taxation on ultra-high-priced dwellings may improve tax equity, but it will be difficult for it to immediately lead to a drop in Gangnam home prices."