Despite Poured Regulations, the Revival of 'Gangnam Bulpae'

Despite 'Transaction Permission' Regulations, Trades Increase in Daechi and Samsung Areas... Record Highs Surge
House Prices Continue to Rise... Multi-Homeowners Concentrate Tax Burden on a Single Smart Property

[Asia Economy Reporter Onyu Lim] Even the stringent regulation of 'transaction permits' did not affect housing prices in Gangnam. Despite bans on loans for high-priced homes and the imposition of high capital gains and property taxes, housing transactions in areas such as Samseong, Daechi, and Cheongdam-dong in Gangnam-gu, Seoul, as well as Jamsil-dong in Songpa-gu?where only actual residents are allowed to trade?have rebounded, with record-high prices continuing to emerge.

According to the Seoul Real Estate Information Plaza on the 28th, the total number of apartment sales transactions in Gangnam-gu, Seoul, last month was 398. This is the highest volume this year, excluding June when Daechi, Samseong, and Cheongdam-dong were designated as land transaction permit zones. In June, transactions abnormally surged to 787 due to concentrated purchases just before the implementation of the land transaction permit system on the 23rd. Since the reporting deadline for housing sales is 30 days after the contract date, it is estimated that apartment sales transactions last month exceeded 400.

Notably, the increase in transaction volume in Daechi and Samseong-dong in Gangnam-gu stands out. These areas are designated as land transaction permit zones, where apartments with land (share) areas exceeding 18㎡ require approval from the local district office for sales transactions solely for actual residence purposes. Properties with leasehold or monthly rent arrangements cannot be traded. Consequently, in Daechi-dong, transaction volumes decreased to ▲7 in August ▲9 in September ▲6 in October, and in Samseong-dong, they were ▲18 in August ▲9 in September ▲7 in October. However, last month, apartment sales transactions rebounded to 19 in Daechi-dong and 39 in Samseong-dong. A representative from Daechi-dong A Real Estate Agency stated, "Since sales are not allowed unless for actual residence, gap investments are impossible, and listings themselves are scarce. Even if the government regulates, it is only temporary; as demand for residence in Daechi-dong continues to increase, transactions inevitably rise."

The land transaction permit system has been criticized for only reducing transaction volumes without curbing housing prices, but the recent increase in transactions highlights the limitations of a regulation-only policy approach. Although the government has imposed overlapping regulations such as raising comprehensive real estate taxes to control Gangnam housing prices, demand for a single smart property has intensified the preference for Gangnam. On the other hand, this also indicates that the rise in Gangnam housing prices stems from actual demand rather than speculation.

As transactions become more active, the upward trend in housing prices continues. According to the Korea Real Estate Board’s weekly apartment trend report, the apartment price index in Gangnam-gu, which was flat in the second week of November, turned to a 0.5% increase in the second week of December. Record-high prices, especially for large units, are also being observed in various locations. A 145㎡ unit in Dongbu Centreville, Daechi-dong, changed hands for 3.93 billion KRW on the 2nd. This is 30 million KRW higher than last month and 180 million KRW higher than in September. Just before the land transaction permit system was implemented, this complex traded in the 3.6 billion KRW range. A 156㎡ unit in Samseong-dong’s I-Park also traded for 4.49 billion KRW on the 12th of last month. Although a mid-level floor unit was traded for 4.05 billion KRW on the 20th of last month, the current asking price ranges from 4.5 to 5 billion KRW.

Hwang Hansol, a research analyst at EconManLab, said, "As tax burdens on multi-homeowners increase, demand is concentrating on a single smart property. Gangnam has stronger demand support than other regions, so although there may be temporary adjustments depending on economic conditions, the expectation that prices will ultimately rise has sustained the 'Gangnam invincibility myth.'"

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