Siheung Wolgot Punglim Iwon 1st Phase Sales Contracts 309 Cases This Year
Low Official Price Leads to Only 1.1% Acquisition Tax, Popular Among Multi-Homeowners
"Government Regulations Harm Genuine Buyers in Need of Affordable Housing"
[Asia Economy Reporter Onyu Lim] It has been revealed that buying demand is concentrated on properties with an official price under 100 million won, which are subject to an acquisition tax rate of only 1.1%. As the comprehensive real estate tax and capital gains tax burdens for multi-homeowners increase starting next month, real estate speculation aiming for loophole contracts is stirring. There are also criticisms that government regulations are ultimately harming genuine buyers.
According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system and the real estate big data company Apartment Actual Transaction Price (Asil) on the 23rd, the number of registered sales transactions for Punglim I-One 1st Complex in Wolgot-dong, Siheung, was 309 from January this year to recently, the highest in Gyeonggi Province. The official price of this apartment, with an exclusive area of 32.95㎡, does not exceed 100 million won, but last month its sale price surpassed 170 million won for the first time. The current market price has risen to 180 million won based on normal floor, building, and orientation standards.
A representative from A Real Estate Agency (licensed) in Wolgot-dong explained, "Because it is a station area apartment where the Wolgot-Pangyo Line will be introduced and acquisition tax surcharges are excluded, purchases by multi-homeowners are flooding in," adding, "There are almost no listings and prices are on the rise."
The government raised the acquisition tax rate up to 12% depending on the number of existing homes through the July 10 real estate measures last year, but houses with an official price under 100 million won are excluded from the housing count and are subject to the basic acquisition tax rate of 1.1% (including the special rural tax and local education tax).
The number of registered sales contracts for Solbitmaeul Jugong 1st Complex in Songhyeon-dong, Dong-gu, Incheon Metropolitan City also reached 129 during the same period. A unit under 100 million won official price, 46.92㎡ on the 8th floor of a building with 10 floors or less, was sold for 175 million won on the 5th, setting a record high. Currently, only rental properties with monthly rent, which make gap investment difficult, remain.
In the real estate industry, expectations are growing that apartment prices will rise further in the second half of the year, leading to concentrated gap investments by multi-homeowners in small houses with official prices under 100 million won. The Ministry of Land conducted a large-scale planned investigation selecting 15 major regions from December last year to March this year to intensively crack down on such market-disturbing activities, but it was insufficient to control market movements.
Buying demand by multi-homeowners for apartments under 100 million won official price is prominent in non-regulated areas. This is because capital gains tax surcharges apply only to designated adjustment areas, and houses priced under 300 million won official price outside Seoul, Gyeonggi, Sejong, and metropolitan cities are excluded from capital gains tax surcharge targets.
The apartment with the most gap investment sales nationwide in the past six months was Baebang Samjeong Green Core in Baebang-eup, Asan, Chungnam (62 cases). This complex, with an official price under 100 million won, had a 47.67㎡ unit sold for 145 million won on the 6th (6th floor), setting a record price. Asan, a non-regulated area, has seen apartment prices rise following the balloon effect that appeared immediately after nearby Cheonan was designated as an adjustment area in the December 17 measures last year.
As a result, there are criticisms that government regulations intended to curb speculation by multi-homeowners have harmed genuine buyers who desperately need affordable housing. A real estate industry official pointed out, "Due to the regulatory balloon effect, even small, low-income housing perceived as having little investment value has fallen into the hands of multi-homeowners."
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