Multi-Homeowners' Gift Transfers Decline Sharply... Seoul Drops by Half in January

Seoul Apartment Gift Transfer Cases Drop from 2,167 in December to 1,026 in January

Apartments in downtown Seoul as seen from Namsan. [Image source=Yonhap News]

[Asia Economy Reporter Lim On-yu] Apartment gifts in the Seoul area, which surged to an all-time high last year due to high-intensity measures targeting multi-homeowners, have decreased to about half this year.

According to the Korea Real Estate Board on the 22nd, the number of apartment gifts nationwide in January recorded 6,142 cases. This is a 37.9% decrease compared to 9,898 cases in December last year. In particular, the number of apartment gifts in Seoul during the same period sharply dropped by 52.7%, from 2,167 cases to 1,026 cases. This is the lowest figure in 10 months since March last year (987 cases). It is also a significant decrease compared to January 2019 (1,511 cases) and January last year (1,632 cases).

The proportion of gifts in Seoul apartment transactions also fell from 15.4% to 7.3%. Apartment transactions consist of sales, judgments, exchanges, gifts, pre-sale rights, resale of pre-sale rights, and other ownership transfers. Especially in the Gangnam 3 districts?Gangnam, Seocho, and Songpa?where there are many high-priced apartments and multi-homeowners, the proportion of gifts dropped significantly. Gangnam-gu decreased from 5% to 1%, Seocho-gu from 22% to 11%, and Songpa-gu from 11% to 7%.

Last year, the nationwide apartment gift fever was the hottest ever as real estate tax hikes targeting multi-homeowners, such as increases in comprehensive real estate tax rates and capital gains tax rates, were implemented one after another. In July, when the government announced that the acquisition tax rate for gifts of houses worth over 300 million KRW in regulated areas would be strengthened to a maximum of 12%, the number of gifts reached 14,153 cases. Apartment gifts were concentrated all at once to avoid tax increases just before the amendment was processed on August 11.

Afterwards, nationwide apartment gifts decreased to 8,668 cases in August, 7,299 in September, and 6,775 in October, but increased again to 9,619 in November and 9,898 in December. However, there is an analysis that the gift fever has cooled down since the new year.

Woo Byung-tak, head of the real estate team at Shinhan Bank Real Estate Investment Advisory Center, said, "There was an unusually high number of gifts last year to avoid high-intensity real estate tax regulations," and analyzed, "The fact that gifts in January this year are below the average of previous years means that almost everyone who intended to gift has already done so."

However, since comprehensive real estate tax and capital gains tax rates will be increased for owners based on June 1, there is also a possibility that gifts will continue until the end of May.