Half of Seoul Apartments Are 'High-Price Homes' Over 900 Million Won

KB Kookmin Bank Liiv ON Monthly Housing Price Trend
January Seoul Apartment Median Price 912.16 Million KRW
First Time Since December 2008 Data Collection Began
Calls to Raise High-End Housing Price Standard

[Asia Economy Reporter Je Moon-won] The median price of apartments in Seoul has surpassed 900 million KRW for the first time ever. The 900 million KRW mark is the price threshold the government uses as the standard for high-priced housing, which triggers capital gains tax on single-homeowners and restrictions on mortgage loans. This essentially means that half of Seoul's apartments are now classified as high-priced housing, likely intensifying debates over heavy taxation on ownership and transaction taxes.

According to the monthly housing price trend report released on the 30th by KB Kookmin Bank's LivOn, the median price of apartments in Seoul as of January was recorded at 912.16 million KRW. The median price is the price located exactly in the middle when housing prices are arranged in order.

Since KB Kookmin Bank began compiling median housing prices in December 2008, this is the first time the median apartment price has exceeded 900 million KRW. When the Moon Jae-in administration took office in May 2017, the median price was about 606.35 million KRW, but it sharply rose past 700 million KRW in January 2018 and 800 million KRW in September of the same year.

Despite the government's successive real estate measures, prices surged by more than 300 million KRW in just over three years. Although the price increase of high-priced homes in the Gangnam area slowed after the government's December 16 real estate policy announcement last year, the balloon effect caused prices of homes below 900 million KRW to rise, which in turn pushed up the median price.

The issue is that the government effectively defines homes priced over 900 million KRW as high-priced housing and imposes heavy ownership and transaction taxes. While housing prices have risen sharply, the tax threshold has remained unchanged for the past decade, resulting in many middle-class homeowners bearing excessive tax burdens. In fact, even single-homeowners must pay capital gains tax on the amount exceeding 900 million KRW when selling their homes, and the acquisition tax rate when purchasing a home also increases to 3.3%.

Additionally, for homes exceeding this amount, the loan-to-value ratio (LTV) drops from 40% to 20%, reducing the amount that can be borrowed. Owners of homes priced over 900 million KRW face various disadvantages, including the recall of both new and existing jeonse loans. Although based on publicly announced prices, the comprehensive real estate tax threshold for single-homeowners is also set at 900 million KRW.

For these reasons, experts have pointed out the need to raise the high-priced housing threshold, which has been set at 900 million KRW for single-homeowner capital gains tax since 2008 and maintained for over ten years.

Kim Deok-rye, Director of Housing Policy at the Korea Research Institute for Human Settlements, said, "Even considering normal inflation rates, maintaining 900 million KRW as the high-priced housing standard for over ten years is inappropriate." However, as the government prioritizes housing price stabilization, it is reportedly planning to maintain the current standard.

This content was produced with the assistance of AI translation services.