Seoul Reconstruction Complex Transactions Frozen Due to Regulations

1 Transaction at Eunma Apartment, Gangnam-gu in August
Most Complexes Only 1-2 Deals Made
Transactions Disappear in Yeouido Area

[Asia Economy Reporters Donghyun Choi and Onyu Lim] Transactions in major reconstruction complexes in the Gangnam area and Yeouido district of Seoul have frozen solid. Due to the government's loan and tax regulations, as well as the two-year residency requirement, a cautious market trend continues, leading to intensified withholding of listings and transaction halts.

According to the Seoul Real Estate Information Plaza on the 28th, except for the sale of a 76.79㎡ unit in Eunma Apartment, Daechi-dong, Gangnam-gu, for 2.22 billion KRW on the 6th, there have been no reported transactions this month. Considering that six transactions occurred in July after Daechi, Samsung, Cheongdam, and Jamsil-dong were designated as land transaction permission zones on June 23, this represents a noticeable contraction. In fact, Jamsil-dong Jugong Apartment Complex 5 in Songpa-gu has not had a single sale this month, whereas five transactions took place last month. Similarly, Banpo Jugong Complex 1 in Banpo-dong, Seocho-gu, had seven sales last month but only one transaction this month.

Since the reporting deadline is within 30 days from the contract date, there is still potential for the transaction volume in these complexes to increase. However, frontline real estate agencies report that listings in reconstruction complexes in the three Gangnam districts (Seocho, Gangnam, Songpa) have sharply decreased recently due to the two-year residency requirement for reconstruction. According to the June 17 real estate measures, from 2021, reconstruction complexes in speculative overheated zones in the metropolitan area that receive association establishment approval require members to have resided for at least two years to obtain move-in rights. A representative from real estate agency A in Daechi-dong said, "It is true that the attractiveness of reconstruction complexes has declined due to the two-year residency rule and the designation of land transaction permission zones," adding, "In the case of Eunma, even lowering the asking price by over 100 million KRW does not lead to sales."

According to transaction data compiled by real estate information company Asil, listings for Jamsil Jugong Complex 5 dropped sharply from 5,426 units at the end of last month to 2,490 units as of the day before, a 54% decrease. During the same period, Eunma's listings fell from 7,714 to 4,203 units, a 46% decline. It is also understood that some agencies are reluctant to register listings following the government's crackdown on false real estate listings.

Alongside the Gangnam area, the Yeouido district in Yeongdeungpo-gu, where reconstruction complexes are concentrated, has seen transactions disappear entirely. Complexes such as Gwangjang, Daegyo, Sambu, Sujeong, and Shibeom had around five transactions each last month, but there has not been a single registered transaction this month. A representative from real estate agency B in this area explained, "Since the government recently announced it would reclaim 90% of the expected profits from reconstruction, the market atmosphere has died down," adding, "Except for some complexes nearing association establishment approval, project progress is sluggish."

Experts predict that a cautious market trend centered on reconstruction complexes will continue for the time being. Ham Young-jin, head of the Zigbang Big Data Lab, emphasized, "In the case of reconstruction, the jeonse (long-term deposit lease) price ratio is lower compared to new buildings, and even if you live with a jeonse, you have to pay a significant capital gains tax when reselling," adding, "Because policies focus on actual residence, buyers who are not going to live there themselves tend to avoid purchasing."

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