Seoul's apartment sales market is splitting by price range amid uncertainty over the loan limit and tax overhaul. More than 8 out of 10 of the 10 transactions reported in July were apartments priced at 1.5 billion won or less, for which buyers can take out a mortgage loan of up to 600 million won. In contrast, the share of apartments priced over 1.5 billion won fell. However, in the around-10-billion-won bracket, where wealthy buyers with low reliance on loans are the main purchasers, record-high and high-priced transactions continued.
According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system on the 1st, Seoul apartment sale transactions totaled 3,493 last month. With time remaining to file transaction reports, the final number of transactions could increase.
Last month, transactions for apartments priced at 1.5 billion won or less came to 2,904, accounting for 83.1% of the total. That was up 6.7 percentage points from 76.4% in the previous month. Under current lending rules, dwellings at or below 1.5 billion won allow a mortgage loan of up to 600 million won. For dwellings over 1.5 billion won and up to 2.5 billion won, the loan limit is 400 million won, and for dwellings over 2.5 billion won, it is reduced to 200 million won. It appears that end users who need to use loans flocked to apartments at or below 1.5 billion won, where funding conditions are relatively more favorable.
Kim Hyo-seon, senior real estate specialist at KB Kookmin Bank, said, "Because it is a price range where people can buy and sell using loans, apartments priced at 1.5 billion won or less have shown a high share of total transactions this year."
By contrast, the share of apartments priced over 1.5 billion won declined. The transaction share for apartments over 1.5 billion won and up to 2.5 billion won was 12.4%, down 4.2 percentage points from the previous month. Apartments over 2.5 billion won and up to 5 billion won also fell 2.5 percentage points to 3.9%. Apartments over 5 billion won made up 0.5% of all transactions, roughly half the previous month's level.
The decline in transactions for apartments in the 1.5 billion–5 billion won range appears to have been influenced by both the reduction in the loan limit and uncertainty over the tax overhaul. Kim In-man, head of the Kim In-man Real Estate Research Institute, said, "For ultra-high-priced dwellings with an officially assessed value over 3 billion won, the direction of the tax overhaul has not been set, so the market is taking a wait-and-see approach," adding, "For apartments in the Han River belt priced in the 2 billion–3 billion won range, the bigger factor than taxes is the difficulty of raising funds using loans, which has significantly reduced transactions."
The government is reviewing measures to increase the property tax burden on high-priced dwellings to ease the concentration of demand on a "one smart home." Separate from the tax overhaul, high-priced apartments in the Gangnam area with higher officially assessed values saw a sharp increase in this year's property tax burden even under the current system. According to an analysis by Woo Byung-tak, specialist at Shinhan Premier Pass Finder, among nine dwelling types priced over 3 billion won in officially assessed value in the three Gangnam districts and Yongsan District, five are expected to post an all-time high property tax this year.
For a single-home owner of a 84-square-meter exclusive unit at Banpo Xi in Banpo-dong, Seocho District, the expected property tax this year is 18.1 million won, up 42.1% from 12.74 million won last year. This amount does not apply the tax credit for seniors or long-term ownership. The increase is not due to a rate hike but because rising home prices were reflected in the officially assessed value, boosting the property tax and the comprehensive real estate tax.
However, a different trend appeared among ultra-high-priced apartments around 10 billion won. As demand from asset-rich buyers with low loan dependence flowed into scarce dwellings such as those along the Han River and reconstruction apartments, some complexes set new record highs.
In Apgujeong-dong, Gangnam District, a 182-square-meter exclusive unit at Shinhyundai 12th set a new record with a transaction at 11.25 billion won on the 4th of last month. In the same neighborhood, a 183-square-meter exclusive unit at Shinhyundai 11th transacted at 10 billion won on the 13th of last month, returning to the 10-billion-won level. In Banpo-dong, Seocho District, a 178-square-meter exclusive unit at ACRO River Park also transacted at 9.8 billion won the same day, surpassing the previous high of 9.5 billion won.