Property Taxes on Apartments in Gangnam Area, Including Acro River Park, with Soaring Prices Increase by Over 20%

Only Market Price Changes Reflected in Next Year's Official Property Prices
Holding Tax Increases in Gangnam, Mapo, and Other Areas with Rising Home Prices

The government has decided to freeze the official property price realization rate (the ratio of official price to market price) for the second consecutive year next year. However, in areas such as the Gangnam district of Seoul, where housing prices have risen this year, property holding taxes are expected to increase by more than 20% compared to the previous year.

View of 'Acro River Park' in Banpo-dong, Seocho-gu, Seoul / Photo by Asia Economy DB

According to the "Revised Plan for Realization of Real Estate Price Disclosure for 2025" reported by the Ministry of Land, Infrastructure and Transport at the Cabinet meeting on the 19th, the official price realization rate next year will be maintained at the 2020 level (69.0% for apartments, 53.6% for detached houses, and 65.5% for land) for the third consecutive year. The "Official Price Realization Roadmap" introduced by the Moon Jae-in administration will not be reflected regardless of the National Assembly's legal amendments.

According to the roadmap, the realization rates next year should be 78.4% for apartments, 66.8% for standard houses, and 80.8% for standard land. However, with the decision to freeze, these rates will be 9.4, 13.2, and 15.3 percentage points lower than the existing realization rates, respectively.

Accordingly, the official price of a 900 million KRW apartment next year will be 632 million KRW, which is 136 million KRW lower than the roadmap-applied price (768 million KRW). The holding tax will also decrease from 901,000 KRW to 865,000 KRW. For a 1.5 billion KRW apartment, the official price next year will be 1.146 billion KRW, which is 124 million KRW lower than the roadmap-applied price (1.37 billion KRW), and the holding tax will decrease by more than 500,000 KRW from 2.943 million KRW to 2.441 million KRW.

According to an analysis by Woo Byung-tak, a senior expert at Shinhan Bank Premier Pathfinder, the estimated holding tax for owners of Acro River Park (84㎡ exclusive area) in Banpo-dong, Seocho-gu, is 14.08 million KRW next year, which is 2.47 million KRW (21%) higher than the estimated payment this year (11.61 million KRW). For the nearby Raemian Prestige (84㎡ exclusive area), the holding tax is estimated to increase by more than 38%, from 9.59 million KRW this year to 13.31 million KRW next year. The official price estimates were calculated by applying a 69% realization rate for apartments and a 43-45% fair market value ratio to the actual transaction prices as of September this year.

Owners of apartments in Mapo, Yongsan, and Seongdong districts, where housing prices have surged this year, may also see their holding taxes increase by more than 10%. A single homeowner of an 84㎡ apartment in Mapo Raemian Prugio, Mapo-gu, is estimated to pay 2.75 million KRW in holding tax next year, about 15% more than the estimated payment this year (2.39 million KRW).

Official prices are used in 67 systems including property tax and health insurance premiums, and the realization rate shows how much the official price reflects the market price. The Ministry of Land, Infrastructure and Transport plans to continue calculating official prices based on housing price fluctuations without artificially raising the realization rate. They also stated they will strive to have the amendment bill to the "Real Estate Price Disclosure Act," which aims to abolish the roadmap, pass through the National Assembly.