Democratic Party 'Hesitates' While Seoul Apartments See Fewer Listings and Price Increases

Seoul Apartment Sales Volume Continues to Decline
Owners Say "Not Selling" as Signs of Property Tax Regulation Easing Appear
Democratic Party Recently Moves to Ease Comprehensive Real Estate Tax

Confusion Over "Tax Cuts for the Wealthy" Persists Even Within the Party
Meanwhile, Seoul Listings Decrease and Prices Rise

Song Young-gil, leader of the Democratic Party of Korea, is attending the Supreme Council meeting held at the National Assembly on the 14th and delivering opening remarks. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Moon Jiwon] As the ruling party and government waver over policy reforms such as easing property taxes, both the volume of apartment transactions and listings in Seoul are simultaneously decreasing, intensifying the atmosphere of rising housing prices. This is interpreted as a result of the growing perception that "there is no need to sell houses immediately" after the by-election for Seoul mayor raised expectations for revitalizing reconstruction, and voices calling for easing comprehensive real estate tax and capital gains tax have emerged even within the ruling party.

According to the real estate industry on the 20th, the phenomenon of 'listing freeze' has been continuing recently, centered on the Seoul real estate market. According to statistics from the Seoul Real Estate Information Plaza, the number of apartment sales transactions in Seoul has shown a clear downward trend, from 7,526 in December last year to 5,777 in January this year, 3,866 in February, 3,765 in March, and 3,158 in April. As listings to avoid the June capital gains tax surcharge and comprehensive real estate tax imposition decrease, this 'transaction cliff' has recently accelerated further.

Looking at statistics from the real estate big data company Asil, the number of apartment listings in Seoul actually decreased by 2.9%, from 47,687 to 46,347 in the past month. Listings have particularly decreased in Jung-gu (-11.3%), Gangnam-gu (-9.5%), Yongsan-gu (-9.3%), Yangcheon-gu (-7.7%), and Seocho-gu (-6.8%). Consequently, apartment prices in Seoul continue to rise.

Major reconstruction-dense areas such as Nowon-gu and the three Gangnam districts have consistently led the rise in housing prices this year. According to statistics from the Korea Real Estate Board, from the first week of January to last week, the cumulative increase rates of apartment prices in Seoul were dominated by Songpa-gu (2.25%), Nowon-gu (2.13%), Seocho-gu (1.90%), and Gangnam-gu (1.88%). These areas have also shown steep price increases in recent weekly surveys.

The recent renewed instability in Seoul apartment prices, after a period of stagnation following the announcement of the 2·4 Housing Supply Plan, is pointed out to be largely influenced by policy confusion between the ruling party and government. Since losing the Seoul mayoral election, the Democratic Party of Korea has been pushing for policy reforms such as raising the thresholds for comprehensive real estate tax and capital gains tax imposition, deferring capital gains tax surcharges, and easing the loan-to-value ratio (LTV) for mortgage loans. However, it has faced internal and external opposition labeling these moves as 'tax cuts for the rich' and 'giving up on stabilizing housing prices,' resulting in ongoing confusion.

In the market, expectations are growing that some regulations will be eased before next year's presidential election, as voices calling for deregulation emerge within the Democratic Party. Analysts interpret that more homeowners have decided to hold onto their properties rather than sell immediately to reduce burdens such as comprehensive real estate tax. On the same day, Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki, at the 22nd Real Estate Market Inspection Meeting, urged to halt the voices calling for deregulation centered in the political sphere, stating, "It is urgent to clear up debates and uncertainties regarding possible changes to existing real estate policies."

The Democratic Party has belatedly shifted its stance toward "no reforms to comprehensive real estate tax, etc.," but many forecasts suggest that the rise in housing prices will continue for the time being. Kwon Il, head of the research team at Real Estate Info, said, "Easing property taxes is aimed at alleviating public dissatisfaction and cannot affect housing price stabilization," adding, "Prices are likely to slow down when actual move-ins occur, but given the current supply situation, it seems difficult within the next three years."

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