Selling Low-Priced and Small Apartments First... The Phenomenon of Owning a "Smart Single Property"

Increase in Proportion of Low-Price and Small-Size Transactions Under 600 Million Won

View of Seoul city apartments from Seoul 63 Square

Following the presidential election, the Seoul real estate market is showing signs of recovery from an unprecedented transaction freeze, with an increase in the proportion of low-priced and small-sized apartment transactions. This is interpreted as a result of the emerging trend of owning a "smart single property" due to heavy taxation on multiple homeowners, alongside a slowdown in the price growth of small apartments.

According to the Ministry of Land, Infrastructure and Transport's actual transaction price system on the 17th, out of a total of 947 reported apartment transactions in Seoul from April 9 (post-election) to May 14, 425 transactions involved apartments priced at 600 million KRW or less, accounting for 44.9% of the total. This is an increase of 11.2 percentage points compared to the 33.7% share of transactions priced at 600 million KRW or less during the same period last year. Apartments priced at 600 million KRW or less are eligible for the representative government-backed mortgage loan, the Bogeumjari Loan.

The proportion of transactions for apartments priced between 900 million KRW and 1.5 billion KRW, which are subject to loan-to-value (LTV) restrictions, decreased from 23.9% last year to 21.6% after this year’s presidential election. Particularly, transactions for apartments priced above 1.5 billion KRW, which are not eligible for mortgage loans at all, dropped more sharply from 15.7% last year to 12.1% this year.

By size, transactions of small and medium-sized apartments increased significantly compared to medium-large apartments. After the presidential election this year, the share of transactions for apartments with a floor area of 60㎡ or less was 61.1%, greatly surpassing last year’s 48.9% for the same period. In contrast, the share of medium-large apartments over 85㎡ fell to 11.7% after the election, down more than 4 percentage points from 16% last year.

A price polarization by size is also emerging. According to the Korea Real Estate Board’s weekly apartment price trend survey, the sales index for small apartments in Seoul (over 40㎡ up to 60㎡) fell by 0.01% in the second week of April (11th) compared to the previous week. Meanwhile, medium-large apartments (over 85㎡ up to 102㎡) rose by 0.03%, and large apartments (over 102㎡ up to 135㎡) increased by 0.02%.

Experts expect that from June 11, when the capital gains tax surcharge on multiple homeowners is temporarily exempted for one year, demand to reduce the number of homes by selling mid-to-low priced apartments in the outskirts will increase further. An industry insider said, "Due to loan regulations and interest rate hikes, the burden of purchasing high-priced homes has increased, leading to more transactions focused on small and low-priced apartments rather than medium-large ones," adding, "The preference for owning a 'smart single property' driven by increased holding taxes such as comprehensive real estate tax also appears to influence this trend."

Meanwhile, according to the Seoul Real Estate Information Plaza, the number of apartment transactions reported in Seoul last month reached 1,191 as of the 17th, marking the highest level in three months since December last year (1,126 transactions). Although this is still less than one-third of the volume in March last year (3,782 transactions), it marks a turnaround to an upward trend after eight months, following a relaxation of regulations after the presidential election.

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