51 Sales and Pre-sale Rights Transactions in April... Highest in 29 Months
Impact of Eased Resale Restrictions
Package-like Real Residence Obligation Abolition Pending in National Assembly
Until earlier this year, the trading of pre-sale and occupancy rights was at a near standstill, but it has increased following the government's regulatory easing measures. The occupancy rights for 'Olympic Park Foreon' (Dunchon Jugong) in Dunchon-dong, Gangdong-gu, Seoul, where concerns about unsold units were widespread, were recently sold for 500 million KRW more than the pre-sale price, aligning with the market prices of surrounding complexes. However, since the relaxation of resale restrictions and the abolition of the real residence obligation, which are considered a package, have yet to pass the National Assembly, it is difficult to predict a full market revitalization.
According to the Seoul Real Estate Information Plaza on the 1st, there were 51 transactions of apartment pre-sale and occupancy rights in Seoul in April. This is nearly four times the 11 transactions in April last year and the highest number in 29 months since December 2020 (82 transactions). Considering that the average monthly transaction volume over the past year was 8, this is a significant increase. This is interpreted as an improvement in buyers' sentiment toward purchasing pre-sale occupancy rights due to a reduced decline in housing prices mainly in the metropolitan area and expectations of future price increases.
By district, Dongdaemun-gu recorded the highest number of transactions with 15, followed by Jung-gu with 12, Eunpyeong-gu with 7, Gangdong-gu with 6, and Gangnam-gu with 2. It appears that urgent sales from sellers feeling financial pressure in prime locations have been exhausted.
The most active complex in Dongdaemun-gu was Lotte Castle SKY-L65 near Cheongnyangni Station in Jeonnong-dong, with 12 occupancy rights traded in both April and May. This complex is a high-rise residential-commercial apartment redeveloped from Cheongnyangni 4 District in Jeonnong-dong.
The 84㎡ occupancy rights for 'Olympic Park Foreon,' which had significant concerns about unsold units, were traded on the 11th of last month for 1.8 billion KRW, 500 million KRW higher than the general pre-sale price. This followed a transaction on the 2nd of the same month at 1.72 billion KRW, marking an 80 million KRW increase. However, looking at actual transaction prices, some trades without premiums and many direct transactions have been observed, so it is premature to conclude that pre-sale rights trading has fully recovered. For example, among nine occupancy rights traded since April at Hanyang Sujain Apartments near Cheongnyangni Station in Dongdaemun-gu, four were direct transactions.
However, due to concerns about abuse of gap investment and other reasons, the abolition of the real residence obligation remains stalled in the National Assembly, making it virtually impossible to trade pre-sale rights for Olympic Park Foreon, where resale restrictions will be lifted in December. Although trading pre-sale rights will be possible when the resale restriction is lifted, transferring pre-sale rights within two years from the subscription winning date incurs a nearly punitive capital gains tax. Currently, selling pre-sale rights within one year of the subscription winning date requires paying 77% of the price difference as capital gains tax (including local income tax), and within two years, 66%. Olympic Park Foreon is subject to the pre-sale price ceiling system and has a real residence obligation imposed.
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