It appears that transactions of high-priced apartments in Seoul surged in April and May ahead of the government's implementation of heavier capital gains taxes on owners of multiple homes. Despite tight loan regulations, listings came on the market to avoid tax burdens, pushing the share of apartment transactions over 1.5 billion won to nearly 28% in May, while the share of transactions over 3 billion won also hit a record high for the year.
According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system on the 2nd, of the 8,779 apartment contracts concluded in Seoul in May, 2,446 transactions exceeded 1.5 billion won, accounting for 27.9% of the total. Purchases by public institutions and canceled contracts were excluded.
The share of apartment transactions over 1.5 billion won in Seoul fell from 21.1% in January to 18.9% in February and 16.6% in March this year. This was due to the effect of the Oct. 15 measures last year, which reduced the mortgage loan limit for dwellings over 1.5 billion won to 200 million–400 million won.
However, as the implementation of the heavier transfer tax drew near, the share of transactions rebounded to 24.2% in April and rose to 27.9% in May, hitting a record high for the year.
After the heavier transfer tax on multiple-home owners took effect on May 10, owners of high-priced apartments put urgent listings on the market at lower prices, and buying appears to have flowed in around those listings.
The government's decision to defer the owner-occupancy requirement within land transaction permit zones for homebuyers without a home during the jeonse contract period, and not to apply the heavier transfer tax to transactions that applied for a land transaction permit by May 9, also influenced the increase in transactions.
In fact, applications for land transaction permits continued through May 9, and after undergoing district office approval procedures, transactions appear to have continued through the end of May.
Transactions of ultra-high-priced apartments over 3 billion won also peaked in May. Transaction volume rose from 156 in March to 442 in April and 514 in May.
The share of apartments over 3 billion won in total transactions fell from 4.0% in January to 2.84% in March, then jumped to 5.11% in April and 5.9% in May.
In the Gangnam area, not only multiple-home owners but also single-home owners worried about reconstruction burdens and rising property taxes put urgent listings on the market, leading to active transactions through May, according to reports.
Transactions of ultra-high-priced apartments over 10 billion won were counted at seven in May, more than double April's three.
By contrast, the share of apartment transactions at 1.5 billion won or less fell from 83.4% in March to 72.1% in May. The share of transactions at 900 million won or less also decreased from 55.1% in March to 48.9% in April and 44.1% in May.
From June, after the heavier transfer tax took effect, the trend reversed. Transactions of high-priced dwellings decreased, and buying concentrated on mid- to low-priced apartments that allow relatively more borrowing.
The share of apartment transactions at 1.5 billion won or less rose to 76.5% in June, and 82% of the transactions reported so far in July were for apartments at 1.5 billion won or less. The share of transactions for apartments over 3 billion won fell to 4.6% in June and has stayed at 3.2% so far in July.
In the market, there is an outlook that if property and transfer tax burdens on ultra-high-priced dwellings rise significantly under the tax reform plan to be announced this month, listings of high-priced dwellings could increase again.
In particular, there is an analysis that selling movements could emerge among retired or older long-term owners of ultra-high-priced reconstruction apartments who find it difficult to bear the increased property tax.