"May Corporate Apartment Purchase Share, Highest Monthly under Moon Administration"

Corporate Apartment Purchase Proportion, Provinces > Capital Area
Tax Burden Soars Due to 7·10 Measures, Potential Increase in Corporate Listings ↑

[Asia Economy Reporter Yuri Kim] In May, the proportion of apartment sales purchased by corporations nationwide reached the highest level since the Moon Jae-in administration took office.

According to an analysis by Real Estate 114 of apartment sales transaction data by buyer type from the Korea Appraisal Board on the 16th, the share of apartments purchased by corporations in May 2020 was recorded at 10.2%. This is the highest monthly record since the current administration began in May 2017. This is attributed to an increase in multi-homeowners, such as gap investors who established corporations to avoid tax regulations.

In May, as the proportion of apartment purchases by corporations increased, the regional breakdown was ▲Gyeongnam (28.0%) ▲Jeonbuk (24.5%) ▲Chungbuk (18.4%) ▲Gangwon (13.9%). The share of corporate apartment purchases was higher in provincial areas (12.5%) than in the metropolitan area (7.3%). This is analyzed as being due to the fact that, unlike the metropolitan area, which is mostly designated as a regulated area with low loan limits and high housing prices, it is easier to purchase apartments with small capital in provincial areas. Real Estate 114 stated, "In some provincial areas, the proportion may have increased because unsold apartments were purchased under corporate names."

It is also analyzed that the strong corporate apartment buying trend, which surged along with rising housing prices, will ease. This is because the government announced stringent regulatory measures to block investment demand aimed at avoiding tax burdens by using corporations. According to the July 10 measures, a maximum tax rate of 12% will be applied when corporations acquire housing in the future. With the increased burden of comprehensive real estate tax, the practical benefits of holding housing are also expected to decrease. From 2021, corporate-owned houses will not receive the basic deduction of 600 million KRW for the comprehensive real estate tax base, and the highest tax rate of 6% will be applied. Kyunghee Yeo, Senior Researcher at Real Estate 114, predicted, "To avoid tax burdens, corporate listings are expected to continue until before the property tax assessment date (June 1) next year."

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