[Practical Finance] 'Nodogang' Officially Announced Price Soars... Commoners Sigh Over Tax Burden

Nowon-gu 35%, Dobong-gu 26%, Gangbuk-gu 22%↑
Mid-low priced apartment prices rise sharply due to panic buying
Increase in apartments over 600 million KRW official price raises property tax burden
Even 20-pyeong single homeowners in Mapo subject to comprehensive real estate tax

[Asia Economy Reporter Kim Hye-min] This year, the official land price increase rate in Seoul nearly reached 20%, surpassing the national average of 19.08%. In particular, the rise in official prices in northern Seoul areas such as Nowon-gu and Seongbuk-gu, which are representative residential areas for the working class, stood out, indicating that the tax burden on ordinary citizens is expected to increase further.

According to the Ministry of Land, Infrastructure and Transport's "2021 Joint Housing Official Price Proposal" released on the 17th, among the 25 autonomous districts in Seoul, Nowon-gu saw the highest increase in official prices at 34.66%. Seongbuk-gu followed at 28.01%, and Dobong-gu (26.19%) and Gangbuk-gu (22.37%), collectively known as "No-Do-Gang," also significantly exceeded the Seoul average. Except for Gangdong-gu, all districts in the top five were in the northern Seoul area.

On the other hand, the three southern districts of Gangnam-gu (13.96%), Seocho-gu (13.53%), and Songpa-gu (19.22%) had official price increase rates below the average. Seocho-gu had the lowest official price among the 25 districts. The increase rates in Gangnam-gu and Seocho-gu were reduced compared to last year, contrasting sharply with Nowon-gu’s rapid rise from 7.16% last year to this year. Among the 25 districts in Seoul, 18 districts had official price increase rates exceeding 20%.

The significant rise in official land prices in northern Seoul is believed to be due to the "panic buying" by people in their 20s and 30s last year, which caused prices of mid-to-low priced apartments to increase substantially. According to statistics from the Korea Real Estate Board, the apartment price increase rate in Seoul last year was 3.01%, but Nowon-gu rose by 5.15%, Gangbuk-gu by 5.08%, and Dobong-gu by 4.25%, all higher than the average.

As the official prices, which serve as the tax base for property tax and comprehensive real estate tax (종합부동산세, Jonghap Budongsanse), rise significantly centered on northern Seoul, the tax burden on ordinary residents living in Seoul is expected to increase further. In particular, homeowners with properties valued over 600 million KRW in official price (market price 860 million KRW) may see their property tax burden increase by up to 30%. According to a simulation analysis by the Ministry of Land, a property with a market price of 1 billion KRW (official price 700 million KRW) will see its holding tax increase from 1.23 million KRW last year to 1.6 million KRW this year, a 30% rise.

In some areas such as Mapo-gu, Yongsan-gu, and Seongdong-gu in Seoul, owning even one apartment with a net floor area of 59㎡ is expected to be subject to the comprehensive real estate tax. Homeowners with properties exceeding 900 million KRW in official price (market price 1.2 to 1.3 billion KRW) must pay this tax, and many newly built apartments in these areas have market prices exceeding 1.2 billion KRW even for small units as of the end of last year.

According to data analyzed by Woo Byung-tak, team leader of Shinhan Bank’s Real Estate Investment Advisory Center, the holding tax for an 84㎡ unit in Mapo Raemian Prugio is 5.35 million KRW, an increase of 1.92 million KRW (55.9%) compared to last year. Among the holding taxes, the comprehensive real estate tax is 1.07 million KRW, which surged by 281.6%.

If the government’s goal to raise the official price ratio to 90% is achieved, the number of comprehensive real estate tax payers is expected to increase further. Even single homeowners who previously received a reduced property tax rate for official prices below 600 million KRW may face increased tax burdens in the future. The government has announced plans to raise the official price ratio relative to market prices to 90% by 2030.

The announced official price proposal can be viewed on the "Real Estate Official Price Informer" website and at city, county, and district offices until the 5th of next month. The final official price announcement will be made on the 29th of next month.

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