Tax Burden and Interest Rates Fuel Surge in Seoul Apartment Listings
With rising tax burdens and higher loan interest rates compounding, an increasing number of Seoul apartments are being put up for sale. Is the impact of increased tax burdens from the tax reform plan and rising interest rates now showing up in the real estate market? The growth in Seoul apartment listings is spreading.
According to real estate big data platform Asil, as of the 8th, Seoul apartment listings stood at 74,011, up 4.5% from a month earlier, having risen steadily after hitting a low of 60,409 on August 3. For prospective homebuyers, this means more options to choose from.
The surge in listings was greater outside the Gangnam area. Compared with a month earlier, Seongbuk-gu rose 18.6% and Seongdong-gu 10.9%, while Yongsan-gu (9.5%) and Nowon-gu (8.7%) also posted large increases. With Gangnam-gu's listing growth limited to 4.1%, listings in non-Gangnam areas appear to have increased recently and more sharply.
Price declines also appeared first in Gangnam. As the government under President Lee Jae-myung had signaled plans to strengthen holding and capital gains taxes on high-value homes, listings grew centered on the three Gangnam districts and prices weakened. Although the government backed off its original tax reform proposal, keeping the basic deduction for non-resident single-home owners under the comprehensive real estate tax at 1.2 billion won and adjusting the tax burden cap to 150%, market sentiment has not turned around.
In the Korea Real Estate Board's weekly apartment price trends for the first week of October (as of the 5th), sale prices in Seocho-gu (-0.27%) and Gangnam-gu (-0.34%) fell for the ninth consecutive week, while Songpa-gu (-0.19%) weakened for a fifth week. KB Real Estate's survey also showed Gangnam-gu apartment sale prices down 0.07%. KB Real Estate explained that while tax burdens have increased the number of properties for sale, buying demand remains on the sidelines, keeping transactions quiet, with price adjustments continuing centered on high-end reconstruction complexes in the Daechi and Apgujeong-dong areas.
Another factor holding buyers back is interest rates. According to the Bank of Korea, the mortgage rate in August rose 18 basis points (1bp=0.01 percentage point) to 4.66%, the highest level in 3 years and 9 months since November 2022. Han Mun-do, a professor of real estate studies at Seoul Digital University, said, "An increase in listings means the market does not expect prices to rise." (Seoul=Yonhap Infomax) Reporter Lee Hyo-ji
