Land Transaction Permit Applications in Gangnam 3-Gu Drop 21% Last Month

Applications for land transaction permits in Seoul's Gangnam, Seocho, and Songpa districts decreased by 21% last month, immediately following the government's announcement of tax reform proposals. In areas designated as land transaction permit zones, administrative approval is required to purchase land, and the decline in the three Gangnam districts was sharper than the average for Seoul as a whole. In July, the total number of land transaction permit applications in Seoul was 5,270, a 15.0% decrease from the previous month. However, the Gangnam 3-Gu saw a larger drop of 21.3%, totaling 558 cases. By region, Songpa-gu recorded the largest decline, falling 24.8% from 351 to 264 cases. Gangnam-gu decreased by 24.6% from 207 to 156 during the same period, while Seocho-gu also fell by 8.6% from 151 to 138.

According to statistics from the Seoul Real Estate Information Plaza, the average apartment transaction price in Gangnam-gu reaches approximately 2.996 billion won, creating an environment where sensitivity to changes in property taxes is high due to the high transaction values in the area. President Lee Jae-myung stated on the 14th of last month that it is not right to extend tax cuts to ultra-high-priced homes. Changes in the attitudes of buyers and sellers centered on high-priced homes were observed immediately following President Lee Jae-myung's remarks. An official from a real estate agency in the Gangnam area reported that transactions have temporarily frozen, as many sellers are watching to see how much their tax burden will increase, while buyers are delaying contracts in consideration of additional regulations.

Analysis by Woo Byung-tak, a specialist at Shinhan Premier Pathfinder, estimates that if the fair market value ratio of 80% is applied, the property tax for next year for an 84-square-meter unit in the Jamshil Jugong 5 complex in Songpa-gu will increase by approximately 99.6%, rising from 12.57 million won this year to 25.09 million won. Nam Hyuk-woo, a researcher at Woori Bank's Real Estate Research Institute, diagnosed that additional inventory could emerge depending on the tax criteria and the level of increase.