Despite the 'Tax Bomb,' Seoul Housing Price Increase Rate Hits Highest in 11 Months

Apartment Sale Prices Rise 0.11%
Highest Since First Week of July Last Year
Buying Sentiment Strengthens Amid Concerns Over Listing Shortage

The top capital gains tax rate on housing was raised to 75% starting June 1. The taxpayers subject to property tax and comprehensive real estate holding tax will also be finalized as of this date. However, the property tax rate has not been finalized due to the legislative amendment process, and the comprehensive real estate holding tax requires further discussion, so the applicable tax rates have not been confirmed. The photo shows the view of apartments in the Gangnam area from the Lotte World Tower Sky Observatory in Songpa-gu, Seoul. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Onyu Lim] Despite the heavy holding taxes on high-priced homes and multi-homeowners, Seoul housing prices recorded the highest increase rate in 11 months. At the end of last month, with the expiration of the capital gains tax surcharge grace period, a phenomenon of supply shortage appeared, causing the market to stir again.

According to the weekly apartment price trend by the Korea Real Estate Board on the 4th, the apartment sales price increase rate in Seoul for the fifth week of May was recorded at 0.11%. This is the highest increase rate in 47 weeks since the first week of July last year (0.11%).

The rise in Seoul housing prices is interpreted as a failure of the policy to stabilize housing prices by inducing sales from multi-homeowners. The government had planned to strengthen capital gains tax and comprehensive real estate tax from June and set a six-month grace period to encourage multi-homeowners to sell. However, the resistance from multi-homeowners continued until May, resulting in little effect. A Korea Real Estate Board official explained, "Even though taxes on multi-homeowners will be significantly strengthened from June 1, a considerable number of multi-homeowners have started to hold on, leading to a shortage of supply and a rise in apartment prices."

In fact, as June began, record-high transactions have been occurring across Seoul. Cheongdam Samik in Cheongdam-dong, Gangnam-gu, with an area of 138㎡ (exclusive area), was traded for 4.4 billion KRW on the 3rd of this month. On the same day, Richensia Bangbae in Bangbae-dong, Seocho-gu, 134㎡, signed a contract for 1.69 billion KRW, which is 240 million KRW higher than in November last year. Shindong-A in Myeongil-dong, Gangdong-gu, 112㎡, was also traded for 1.68 billion KRW on the 1st of this month, 30 million KRW higher than the previous record price. On the same day, Shingil Central I-Park in Shingil-dong, Yeongdeungpo-gu, 84㎡, also set a new record by contracting at 1.61 billion KRW.

An official from a real estate agency in Daechi-dong, Gangnam-gu, Seoul, said, "The fact that multi-homeowners did not sell their houses until May means they intend to hold on," and predicted, "There is a shortage of sellers, so record-high prices will continue."

The strengthened buying sentiment due to the shortage of supply is also reflected in indicators. The apartment sales demand-supply index in Seoul for the fifth week of May was 104.6, which is 0.3 points higher than the previous week (104.3). The demand-supply index is calculated by analyzing surveys from member real estate agencies of the Real Estate Board and the number of online listings, quantifying the balance of demand and supply. A value above 100 indicates stronger buying sentiment.

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