Apartment Gift Trend Continues... Songpa-gu Accounts for Nearly Half

1286 Apartment Gifts in Seoul in July
612 Cases in Songpa-gu Alone...47.5%
"Relatively Lower Gift Tax Burden Among Gangnam 3 Districts"

Apartment view of Seoul city seen from Namsan, Seoul on the 2nd ＜Photo by Yonhap News＞

As the real estate market continues to experience a transaction freeze, the trend of apartment gifting persists, centered around the Gangnam 3 districts in Seoul. In particular, Songpa-gu is analyzed to account for nearly half of all gifting transactions in Seoul, drawing attention to the reasons behind this phenomenon.

According to the monthly apartment sales transaction report by the Korea Real Estate Board on the 2nd, out of 7,848 apartment transactions in Seoul in July, 1,286 were gifting transactions, accounting for 16.4%. Although this is 6.5 percentage points lower than the 22.9% recorded in the previous month, it remains significantly higher compared to the beginning of the year, with 7.3% in January and 10.6% in February.

The ongoing gifting trend appears to be due to the sharp increase in tax burdens on multi-homeowners caused by strengthened capital gains tax and comprehensive real estate tax amid soaring housing prices. Indeed, many gifts occurred in the Gangnam 3 districts, where high-priced homes are concentrated. Songpa-gu recorded 612 cases, followed by Gangnam-gu with 349 cases, and Seocho-gu with 50 cases. Together, the Gangnam 3 districts accounted for 78.6% of all gifting transactions in Seoul.

Seo Jin-hyung, president of the Korea Real Estate Society and professor at Gyeongin Women's University, stated, "The capital gains tax rate for multi-homeowners can reach up to 82.5%. In the Gangnam 3 districts, where there are many high-priced and multiple homes, owners are choosing gifting over selling." He added that considering gifting is advantageous when housing prices are low, the spread of gifting also indicates a strong expectation that housing prices will continue to rise in the market.

What is particularly noteworthy is the concentration of gifting in Songpa-gu. Out of the total 1,286 gifting transactions in July, Songpa-gu accounted for 612, or 47.59%. This means nearly one out of every two gifted apartments was in Songpa-gu. In the previous month as well, Songpa-gu apartments accounted for 37% of all gifting transactions in Seoul.

Experts explain the concentration of gifting in Songpa as a side effect of the 'smart one house' phenomenon.

Lim Byung-chul, senior researcher at Real Estate 114, said, "When tax burdens increase, investment demand tends to focus on owning a smart one house. Owners adopt an exit strategy to reduce taxes by holding only one property. From this perspective, among the Gangnam 3 districts, Songpa, where housing prices are relatively lower and tax burdens lighter, is more likely to be the target for gifting."

Ko Jun-seok, adjunct professor at Dongguk University Law School, also noted, "Even wealthy individuals owning one house each in the Gangnam 3 districts find gifting high-priced homes burdensome. Although Songpa is grouped with Gangnam 3 districts, the gifting amounts there are relatively lower compared to Gangnam and Seocho." For example, a person owning one apartment each in Apgujeong-dong, Gangnam-gu, and Bangi-dong, Songpa-gu, would logically sell the Bangi-dong apartment first.

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