After the government unveiled its Aug. 3 tax reform plan, apartment listings have increased in Seoul's Gangnam area, and asking prices several hundred million won below record transaction prices are appearing. As the cap on the long-term holding special deduction is newly set, homeowners of ultra-high-priced dwellings with large capital gains are expected to face heavier tax burdens, prompting some to rush to sell. In contrast, on the outskirts of Seoul, including Jungnang District, real demand is flowing in for mid- to low-priced dwellings, and a streak of record-high prices is continuing.
According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system on the 11th, an 84-square-meter exclusive-use unit at ACRO River Park in Banpo-dong, Seocho District, changed hands for 5.39 billion won on the 6th. That is 910 million won lower than the record transaction price of 6.3 billion won for the same size in May.
In Apgujeong as well, listings are emerging well below past record transaction prices. A 131-square-meter exclusive-use unit at Hyundai 1·2 in Apgujeong-dong, Gangnam District, was listed at 6.1 billion won, 1 billion won below the record transaction price of 7.1 billion won for the same size. A 107-square-meter exclusive-use unit at Shin Hyundai was also listed in the mid-5.6 billion won range, below the February transaction price of 6.38 billion won. Listing descriptions included phrases such as "quick contract possible" and "special urgent sale."
Listings have also increased mainly in Gangnam and along the Han River. According to real estate big data firm Asil, as of the previous day, Seoul apartment sale listings totaled 61,650, up 2.0% from 60,409 on the 3rd, when the tax reform plan was announced. Over the same period, listings in Seocho District rose 5.0% from 7,630 to 8,014. Gangnam District was up 3.7%, Seongdong District 3.3%, Yeongdeungpo District 3.1%, Yongsan District 2.9%, and Mapo District 2.7%.
A licensed real estate agent in Apgujeong-dong said, "There are homeowners looking to sell dwellings before the long-term holding special deduction system changes to reduce capital gains tax," adding, "For homeowners who received their units in past allocations, capital gains amount to at least 5 billion won, so they judge that even if they lower their asking price somewhat, the tax savings can offset it."
The government plan changes the long-term holding special deduction for dwellings to a long-term residence income deduction and lowers the deduction cap to 2 billion won in 2028 and 1 billion won from 2029. Currently, there is no cap based on the deduction rate. If the deduction amount decreases, the taxable base grows, increasing the capital gains tax burden.
In the example presented by the government, if a one-homeowner who acquired a dwelling for 2.5 billion won and held and lived in it for 10 years sells it for 7.5 billion won, the capital gains tax in 2027 is 316 million won. If the law is revised as proposed and the deduction cap is reduced to 1 billion won, selling in 2029 would raise the capital gains tax to 1.373 billion won.
Unlike in Gangnam, record-high transactions are continuing on the outskirts of Seoul. According to the Korea Real Estate Board (REB)'s weekly apartment price trends, in the first week of August, apartment prices in Jungnang District rose 0.52% from the previous week.
An 84-square-meter exclusive-use unit at Shinnae Woodian Complex 1 in Shinnae-dong, Jungnang District, set a new record when it transacted for 885 million won on the 22nd of last month. That is an increase of 285 million won from the January transaction price of 600 million won. An 84-square-meter exclusive-use unit at Sagajeong Central I'Park in Myeonmok-dong also set a record when it transacted for 1.535 billion won on the 24th of last month.
Because prices are relatively lower than in Gangnam, making it easier to use mortgages, and with jeonse prices also rising, it is assessed that real demand from people without homes and newlyweds has flowed into the sale market.
Nam Hyeok-woo of the Woori Bank Real Estate Research Institute said, "In Jungnang District, jeonse prices have risen steeply, while sales price increases had been relatively slower," adding, "With steady real demand flowing in, centered on apartments around 600 million won, from single-person households without homes and newlyweds, home prices are rising quickly."