"Is This Year's Officially Announced Price Appropriate?"... Opinions Sharply Divided

Selling Intentions Due to Property Tax Burden at 34.8%

Appropriateness of the 2020 Officially Announced Prices for Multi-family Housing (Draft)

[Asia Economy Reporter Lim On-yu] Opinions among Zigbang users are sharply divided on the appropriateness of this year's official public housing price proposal, which focuses on the realization of the official price for multi-family housing priced over 900 million KRW. Additionally, about 3 out of 10 users reported considering selling their property due to the tax burden felt from the announcement of the official price.

Zigbang announced the results of a survey conducted on March 9th, targeting 1,470 application users throughout March, regarding the "2020 Official Public Housing Price Proposal by the Ministry of Land, Infrastructure and Transport." When asked whether the official price proposal was appropriate, 34.7% of respondents answered "appropriately reflected," while 33.5% said "not appropriately reflected," showing a narrow margin. Those who answered "don't know" accounted for 31.8%.

Ham Young-jin, head of Zigbang Big Data Lab, analyzed, "The proportion of multi-family housing priced over 900 million KRW, which experienced a high increase rate in official prices, is relatively small compared to the total housing stock. There is also a difference in perception regarding the criteria for judging the appropriateness of the official price depending on whether one owns multi-family housing, which led to sharply divided responses on the appropriateness."

Among respondents, 823 (56%) owned multi-family housing such as apartments, row houses, or villas, while 647 (44%) did not. Among those who owned housing, 40.3% said the official price was appropriately reflected, and 32.8% said it was not. Conversely, among non-owners, 38% answered "don't know," 34.5% said it was not appropriately reflected, and 27.5% said it was appropriately reflected.

When housing owners were asked if they would consider selling due to the burden of holding taxes such as property tax and comprehensive real estate tax following this year's official price announcement, 286 (34.8%) answered "yes." The remaining 537 (65.2%) said they would "continue to hold." This indicates a stronger tendency to retain properties rather than putting them on the market due to tax burdens.

Among those considering selling, the most common response regarding the timing of sale was "after next year," at 49%. This was followed by the second quarter (28.7%), third quarter (13.3%), and fourth quarter (9.1%). This suggests a tendency to monitor market conditions and adjust the timing of sale rather than rushing to sell due to immediate tax burdens.

Those considering selling in the second quarter appear to have taken into account that June 1 is the property tax assessment date and that until June 30, multi-homeowners in designated adjustment areas are temporarily exempt from the increased capital gains tax.

The price range of multi-family housing considered for sale was highest at "under 300 million KRW" with 35%. This was followed by "300 million KRW to under 600 million KRW" (26.2%) and "600 million KRW to under 900 million KRW" (17.8%), indicating a stronger tendency to sell properties in relatively lower price ranges.

Even when selling, multi-homeowners seem to prefer holding onto a single prime property, choosing to dispose of lower-value properties in areas where price appreciation is expected to be limited. Differences may also exist depending on the price range of properties held by survey participants.

Lab head Ham stated, "As the COVID-19 situation prolongs and the economy contracts, there may be price declines and selling movements due to tax burdens in some regions. However, with the base interest rate entering the 0% range for the first time and the continuation of a low-interest rate environment, rather than indiscriminate selling, a market watchful stance is expected to deepen for the time being."

Meanwhile, the official public housing prices will be announced on the 29th of this month, with objections accepted until the 29th of next month, and any adjustments will be announced on June 26.

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