Significant Increase in Official Prices of High-Value Homes... Property Tax Soars by Tens of Thousands of Won

Gangnam 1 Billion Won Homes' Property Tax This Year 4.48 Million Won... Up 800,000 Won
Higher Official Price Increase Rates for Luxury Homes Over 900 Million Won
Gangnam 4 Districts, Ma-Yong-Seong Regulations Focused... Real Estate Fluctuations Monitored

Residential area in Mapo-gu, Seoul (Photo by Yonhap News)

[Asia Economy Reporter Moon Jiwon] As the government announced the '2020 Standard Single-Family House Officially Assessed Price,' attention is focused on how much the burden of property tax will increase this year. The industry expects that there will be many houses put on the market this year, as the officially assessed prices have risen relatively significantly, especially for high-priced houses.

According to the Ministry of Land, Infrastructure and Transport on the 22nd, the officially assessed price of standard single-family houses nationwide rose by an average of 4.47% this year. In Seoul, the officially assessed price increased by 6.82%.

By price range, the increases were ▲under 300 million KRW: 2.37% ▲300 million to 600 million KRW: 3.32% ▲600 million to 900 million KRW: 3.77% ▲900 million to 1.2 billion KRW: 7.90% ▲1.2 billion to 1.5 billion KRW: 10.10% ▲1.5 billion to 3 billion KRW: 7.49% ▲over 3 billion KRW: 4.78%.

Both nationwide and in Seoul, the rate of increase slowed compared to last year, but for high-priced houses in the 900 million to 3 billion KRW range, the increase was relatively large.

The Ministry of Land explained, "By price range, the rate of change in officially assessed prices for houses priced over 900 million KRW, where the realization rate improvement was applied, is high, while the rate of change for houses under 900 million KRW is low."

Accordingly, those who own high-priced houses are expected to face a significantly higher property tax burden this year.

According to the Ministry's analysis, a person owning a house valued at 320 million KRW last year in Seongdong-gu, Seoul, will see the officially assessed price rise to 316 million KRW this year, increasing their property tax from 581,000 KRW to 618,000 KRW.

A house valued at 589 million KRW in Gwangjin-gu will have its officially assessed price rise to 638 million KRW this year, increasing the property tax from 1,435,000 KRW to 1,617,000 KRW. A house valued at 857 million KRW in Yongsan-gu will see its officially assessed price rise to 946 million KRW, increasing the property tax from 2,432,000 KRW to 2,942,000 KRW, nearly a 500,000 KRW increase.

A house valued at 1.06 billion KRW in Gangnam-gu will have its officially assessed price rise to 1.148 billion KRW, increasing the property tax from 3,612,000 KRW to 4,479,000 KRW, an increase of over 800,000 KRW. This is an estimated change in property tax and comprehensive real estate tax calculated based on a single-homeowner, and the actual amount may vary somewhat.

Photo by Kang Jin-hyung aymsdream@

The property tax burden is expected to continue increasing until 2022, when the fair market value ratio reaches 100%, leading to an analysis that the number of properties put on the market by multi-homeowners will gradually increase.

Since the government is focusing regulations on high-priced complexes in the Gangnam 4 districts (Gangnam, Seocho, Songpa, Gangdong) and Mapo, Yongsan, Seongdong districts (Mayongseong) in Seoul, attention is focused on changes in the real estate market in these areas.

This year, the officially assessed prices rose by 6.38% in Gangnam-gu, 6.67% in Seocho-gu, 6.82% in Songpa-gu, and 7.23% in Gangdong-gu. In Mapo-gu, the increase was 8.79%, in Yongsan-gu 7.5%, and in Seongdong-gu 8.87%.

Ham Youngjin, head of the Zigbang Big Data Lab, analyzed, "This year, the tax policy was decided to increase the property tax burden mainly on ultra-high-priced houses with officially assessed prices over 1.2 billion KRW, raising the market price reflection rate for single-family houses over 1.2 billion KRW, rather than on mid- to low-priced houses."

He added, "In Seoul, tax burdens are expected to increase mainly on luxury single-family houses in the Gangnam area and along the Han River, including Samsung, Nonhyeon, Bangbae, Hannam, Itaewon, and Seongbuk-dong. It is also inevitable that the officially assessed prices of other individual houses, calculated using the housing price conversion table based on the standard house officially assessed price, will increase overall."