Seoul Apartment Listings Pile Up Amid Capital Gains Tax Fears...Trend Spreads Beyond Gangnam

As the government ramps up its hardline pressure on owners of high-priced homes in the Gangnam area and on owners of multiple homes, the increase in apartment listings in Seoul has become clearly visible. In particular, since the Lunar New Year holidays, the share of listings outside the Gangnam area in the Seoul housing transaction market has been expanding. Analysts say this reflects that owners of multiple homes have begun in earnest to sell properties in outlying areas where the capital gains tax burden is relatively lighter.

On the 4th, a notice about capital gains tax for owners of multiple homes was posted at a real estate agency in Gangnam District, Seoul. That day, President Lee Jaemyung said, "People who are suffering from skyrocketing housing prices should be given more consideration than owners of multiple homes who engage in real estate speculation and hold the unfair expectation that 'it will be extended again'." Yonhap News

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According to a statistical analysis by The Asia Business Daily of data from Asil, a real estate big data platform, apartment listings (including officetels) in Seoul have surged by 25.1% over the past month or so, after President Lee Jaemyung repeatedly expressed via social media his intention to increase the tax burden on owners of multiple homes and on non-resident single-home owners.

Just before President Lee posted his first social media message, on the 22nd of last month, there were 56,216 listings; as of the 25th of this month, that number had risen to 70,333. The government's strong measures and the pressure applied through President Lee's social media messages are seen as having had a significant impact on spreading selling sentiment in the market.

Among the three Gangnam districts that the government has singled out as the hotbed of real estate speculation, Songpa District has seen the most pronounced increase in listings. During this period, listings in Songpa District rose from 3,526 to 5,167, an increase of 46.5%. This is the second-highest growth rate after Seongdong District, where listings jumped 58.7%. Neighboring Gangdong District also saw listings climb from 2,555 to 3,649 over the same period, up 42.8%, ranking third in terms of growth rate.

Seocho District recorded a 28.1% increase, with listings rising from 6,267 to 8,033. Gangnam District saw listings grow from 2,551 to 3,036, up 19%, but this fell short of the average increase for Seoul.

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Notably, when the period is narrowed to the most recent 10 days, a shift in the flow of listings becomes apparent. From January 22 to February 15, the rate of increase in listings in the three Gangnam districts of Gangnam, Seocho, and Songpa was 24.3%, which was 11.0 percentage points higher than the 13.3% increase recorded in the other 22 districts.

In contrast, over the 10 days since February 15, the pace of increase in listings has been steeper outside the Gangnam area. The growth rate in the three Gangnam districts slowed somewhat to 5.2%, while non-Gangnam districts continued to post an 8.6% increase. In particular, Gangnam District recorded a listings growth rate of just 3.0% during this period, the lowest among all 25 autonomous districts.

Up until the Lunar New Year holidays, listing backlogs were more pronounced in the Gangnam area, but since then, selling activity has been more active outside Gangnam.

Experts interpret this trend as signaling that owners of multiple homes have begun in earnest to dispose of surplus properties outside the Gangnam area.

Park Won-gap, Chief Real Estate Expert at KB Kookmin Bank, said, "There are not that many owners of multiple homes who hold several high-priced properties in the Gangnam area," adding, "Rather, a significant portion of the urgent sales in Gangnam are homes owned by elderly people who feel burdened by the reduction in long-term holding special deductions and the possibility of higher property holding taxes." Park added, "The recent increase in listings outside the Gangnam area indicates that owners of multiple homes have begun in earnest to dispose of their surplus properties."

Ham Youngjin, head of the Real Estate Research Lab at Woori Bank, likewise said, "From the perspective of owners of multiple homes, the structure effectively forces them to first dispose of properties outside the Gangnam area, where the gains are relatively smaller." For this reason, he predicted that, for the time being, transactions are also highly likely to be reorganized around mid- to low-priced homes, where borrowing barriers are relatively lower.

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Some observers also predict that the government's regulations are highly likely to lead not only to falling home prices in the Gangnam area but also to a simultaneous weakening of the market outside Gangnam. In that case, expectations for further price increases would be dampened, and the housing market would clearly shift toward a "more sellers than buyers" structure.

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