Ahead of Capital Gains Tax Hike... Seoul Housing Prices Actually See Wider Increase

The Acceleration of Jeonse Converting to Monthly Rent

A view of the apartment complexes in the Gangnam area as seen from the Lotte World Tower Sky Observatory in Songpa-gu, Seoul. Photo by Dongju Yoon doso7@

Seoul housing prices last month increased their rate of rise just before the implementation of the capital gains tax and comprehensive real estate tax surcharges, as well as the new lease reporting system. The Lease 3 Act has instead triggered a decrease in circulating lease supply in the market, stimulating even the sales prices.

According to the nationwide housing price trends announced by the Korea Real Estate Board on the 1st, Seoul's housing prices (including apartments, multiplexes, and detached houses) rose by 0.40% last month, expanding the increase compared to the previous month (0.35%). Seoul had seen a reduction in the rate of increase for two consecutive months?0.51% in February, 0.38% in March, and 0.35% in April?due to the impact of the 2·4 Plan announcement to supply 830,000 households nationwide, but the upward trend is steepening again.

◇ Increase rate four times that of last year... Housing prices becoming more unstable = The cumulative increase rate of sales prices in Seoul from the beginning of this year through May reached 2.05%, exceeding four times the rate during the same period last year (0.51%).

In particular, apartment prices rose 0.48% last month and 2.49% for the year, showing a steeper upward trend. Contrary to the government's expectation that housing prices would stabilize in the first half of the year, excessive regulations are instead stimulating prices further. This is interpreted as a combined effect of declining trust in the government's public development projects, Seoul Mayor Oh Se-hoon's push to ease reconstruction regulations, and the ruling party's election-driven real estate measures.

In fact, buying demand is gathering not only in the Gangnam area but also in the Gangbuk area of Seoul. The relatively affordable northeastern districts of Seoul, such as Nowon-gu (0.76%) and Dobong-gu (0.57%), are leading the rise this year due to overlapping development benefits like reconstruction. The Gangnam-gu (0.60%), Seocho-gu (0.59%), and Songpa-gu (0.53%) districts, which have major reconstruction complexes, are also seeing continued increases. The Real Estate Board explained, "In Gangnam, reconstruction and mid-to-large sized properties with expectations of deregulation have risen, while in Gangbuk, development benefits have driven increases mainly in low-to-mid priced properties."

Incheon and Gyeonggi Province both slightly reduced their rate of increase this month, causing the overall housing price increase rate in the metropolitan area to shrink from 0.91% to 0.86%. However, since the cumulative increase rate in Incheon and Gyeonggi Province this year is approaching double that of last year at around 6%, it is difficult to mention stability. Recently, as interest in the metropolitan area’s Great Train Express (GTX) has grown in the real estate market, housing prices in key metropolitan areas such as Siheung-si (3.26%) have been fluctuating.

◇ Seoul listings return to levels from over 80 days ago... ‘Jeonse turning into monthly rent’ also accelerates = The total apartment listings (sales, Jeonse, and monthly rent) in Seoul, which had been accumulating this year, are gradually being depleted. After peaking at around 88,000 cases in April, a clear downward trend has followed.

According to the real estate big data company Asil, as of this day, the total apartment listings in Seoul stand at 82,913. The total apartment listings in Seoul dropping to the 82,000 range is the first time in over 80 days since March 13 (82,241 cases). Notably, the composition of listings has changed during this period. Jeonse listings decreased by 7.3%, from 22,939 to 21,263, while monthly rent listings increased by 7.26%, from 15,315 to 16,427.

Jeonse listings are drying up, and the trend of Jeonse turning into monthly rent is accelerating. Tenants unable to find Jeonse are turning to purchase, creating a vicious cycle that drives up housing prices. Seo Jin-hyung, president of the Korea Real Estate Society (professor at Gyeongin National University), said, "If landlords are regulated, overall housing supply will decrease," adding, "In the market, price increases due to excess demand are likely to continue."

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