"Sell Before the Tax Bomb": Multi-Homeowners Make Last-Minute Push... 566 Daily Land Transaction Permit Applications in Seoul [Capital Gains Tax Hike D-2]

1,132 Residential Land Transaction Permit Applications in Seoul from May 1 to 6
Up 29.2% from Previous Month’s Daily Average of 438
“Listing Freeze” Likely after Surcharge Resumes on May 10

Apartment view in Songpa-gu, Seoul. Photo by Yonhap News Agency

As the end of the temporary suspension of the capital gains tax (CGT) surcharge for owners of multiple homes approaches on May 9, the number of applications for residential land transaction permits in Seoul has increased this month. Despite the recent rebound in home prices, especially in high-demand areas such as the three Gangnam districts, following declines in March and April due to increased listings, transactions remain active until the very last minute—contrary to expectations that there would be no more properties coming onto the market. It appears that many are applying for land transaction permits before the CGT surcharge resumes, as this allows them to avoid additional tax burdens. Among Seoul’s districts, Nowon-gu recorded the highest number of applications.

According to an analysis of the land transaction permit data from the Seoul Real Estate Information Plaza on May 8, there were 1,132 residential land transaction permit applications submitted in Seoul between May 1 and 6 (excluding Dongdaemun-gu, Seongdong-gu, and Yongsan-gu, which were not counted). Given that there were only two working days during this period—due to Labor Day, weekends, and Children's Day holidays—an average of 566 applications were submitted per day.

This represents a 29.2% increase compared to the previous month's daily average of 438 applications. In April, there were a total of 10,528 residential land transaction permit applications in Seoul, the highest since the October 15 real estate measures last year designated all of Seoul as a land transaction permit zone (land permit zone). However, considering the number of working days, the daily average did not reach 500 applications.

Monthly statistics show that the number of land transaction permit applications has continued to rise as the CGT surcharge resumption draws nearer. In January, there were 5,758 applications for residential land transaction permits, but this figure increased by nearly 10% to 6,328 in February, when the CGT controversy intensified.

Last month, among Seoul's 25 districts, Nowon-gu saw the highest number of applications at 1,173, accounting for 11.1% of the total. A real estate agency in Sanggye-dong stated, "There were many inquiries from buyers looking for properties listed at lower prices than before," adding, "Once it was confirmed that the CGT surcharge would definitely be implemented, homeowners began to sell." This was followed by Songpa-gu with 737 applications (7%), Gangseo-gu with 714 (6.8%), Guro-gu with 612 (5.8%), and Seongbuk-gu with 610 (5.8%). Applications were higher in areas with dense residential populations. The districts with the fewest applications were Jongno-gu with 95 (0.9%), Jung-gu with 103 (1.0%), Gwangjin-gu with 146 (1.4%), and Geumcheon-gu with 190 (1.8%).

The regions with the highest month-on-month increases in applications were in the southeastern part of Seoul and along the Han River belt. As these areas have seen notable home price increases within Seoul, it appears that buyers aimed to secure profits before the CGT surcharge resumes. Seocho-gu experienced the largest spike, with applications up 180.1%. This was followed by Seongdong-gu (137.1%), Gangdong-gu (120.8%), Songpa-gu (87.5%), Gangseo-gu (85.5%), and Yongsan-gu (80.8%). Gangnam-gu also increased by 66.7%, ranking eighth overall. The smallest increase was in Geumcheon-gu, at just 2.7%. Dongdaemun-gu (25.1%), Gangbuk-gu (35.6%), Jungnang-gu (37.8%), and Dobong-gu (38.1%) also recorded relatively low growth rates.

However, starting May 10, when the CGT surcharge is fully enforced, it is highly likely that a "listing freeze" phenomenon will emerge, as many owners are determined to hold onto their multiple properties even if they have to pay higher property holding taxes. A real estate agent in Bangbae-dong, Seocho-gu, commented, "Property owners who intended to sell have mostly completed their sales already. Those determined to hold out plan to keep their properties despite the property tax." The government is considering additional measures. There is strong speculation that the tax reform bill to be announced in July may include further strengthening of property holding taxes. President Lee Jaemyung previously mentioned on his social networking service (SNS), "Even if the tax for holding on is higher than the tax for selling, would people still choose to hold?," leaving open the possibility of real estate tax reform.

Listings are also gradually declining. According to data from big data real estate firm Asil, as of May 7, the number of apartment sale listings in Seoul stood at 69,554, a decrease of 13.1% compared to the peak of 80,080 recorded on March 21 this year.

Hyosun Kim, Senior Real Estate Specialist at KB Kookmin Bank, said, "As of next week, even if owners of multiple homes sell at the same price, the increased tax burden will likely result in fewer listings. There is also a wait-and-see sentiment in the market, as policy events such as a possible overhaul of the comprehensive real estate tax are expected following next month's local elections."

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