2022 Housing Gift Share 10.3%
Shift to Gifts Instead of Sales During House Price Decline
Number of Gifts Decreases... Statistical Illusion Effect
[Asia Economy Reporters Minyoung Kim and Hyunju Lee] Last year, the proportion of gifts in nationwide housing transactions reached an all-time high. This is believed to be due to an increase in homeowners bypassing sales through gifts amid a housing market downturn, and a rush to complete gifts before the acquisition tax criteria change this year. However, some analysts argue that this is a kind of statistical illusion caused by the fact that while the total volume of housing transactions sharply declined, the decrease in gifts was less significant.
According to the '2022 Nationwide Housing Transaction Volume, Gift Volume, and Proportion' data requested by Asia Economy from the office of People Power Party lawmaker Yuk Kyung-jun on the 2nd, last year, the total number of housing transactions nationwide was 933,347, of which 94,856 were gifts, accounting for 10.2% of the total. This is the highest figure since the Korea Real Estate Board began compiling related statistics in 2006.
The increase in the proportion of gifts is understood to be due to more homeowners opting to gift rather than sell quickly during the real estate price decline. Until 2021, many chose gifts due to the heavy capital gains tax burden on multi-homeowners, but last year, as house prices fell sharply, more chose gifting over selling.
According to the Real Estate Board, the nationwide comprehensive housing price index rose 9.93% cumulatively by 2021. However, last year, the comprehensive housing price index in the Seoul metropolitan area fell 6.48% compared to the previous year. Nationwide apartment sale prices dropped 7.56% compared to 2020. Additionally, some who put their homes up for sale but found it difficult to sell due to market stagnation turned to gifting, which also influenced the trend.
Tax factors were also a major reason for hastening gifts. From this year, the acquisition tax basis for gifts changed from the standard market price to the recognized market price, raising concerns about increased taxes and prompting a rush to complete gifts. The standard market price is the government’s publicly announced price (officially assessed value) for real estate tax collection, typically 60-70% of the market price. However, from this year, acquisition tax will be levied based on the recognized market price, which is expected to increase the tax amount. In other words, the acquisition tax burden when gifting will rise.
However, the absolute volume of gift transactions decreased compared to previous years. Therefore, the historically high proportion of gifts is pointed out as an illusion caused by the sharp decline in total housing transactions. The number of housing transactions fell 42% from 1,620,781 in 2021 to 933,347, and the number of housing gifts also dropped 30% from 137,248 to 94,856. In other words, while the denominator?the total number of housing transactions?sharply decreased, the decrease in gifts was less, resulting in a higher proportion of gifts overall.
Yoon Ji-hae, chief researcher at Real Estate R114, said, "Gifting may have increased somewhat during the market downturn due to the tax-saving effect of gifting, but since the absolute number of gift transactions did not increase significantly, it is understood as a kind of statistical illusion."
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