Deepening Polarization in the Real Estate Market
Seoul Apartment Official Prices Up 7.86%
Shinhyundai 9th Complex in Apgujeong Increases by 700 Million KRW
Additional Burden of 5.2 Million KRW from 13.28 Million KRW
Single-Digit Growth in Gangbuk Area
10 Out of 17 Metropolitan Cities and Provinces See Declines
A homeowner with a single residence of 82㎡ in Jamsil Jugong Complex 5, a major apartment complex in Songpa-gu, Seoul, will see their property tax increase by 1.75 million KRW compared to last year. It is estimated that they will pay a total of 7.64 million KRW, including property tax and comprehensive real estate tax. The property tax for the standard unit (84㎡) of Raemian One Bailey in Banpo-dong, Seocho-gu, is expected to rise by 4.8 million KRW (35.9%) from 13.4 million KRW last year to 18.2 million KRW this year. Due to last year’s surge in housing prices, the burden of property taxes has significantly increased in areas where official prices also rose. Experts predict that the gap in official prices between regions has become more pronounced, further intensifying the polarization of the real estate market.
According to a simulation calculation by the Ministry of Land, Infrastructure and Transport and Woo Byung-tak, a senior specialist at Shinhan Bank Premier Pathfinder, the official price of Eunma Apartment (84㎡) in Daechi-dong, Gangnam-gu, rose from 1.8 billion KRW last year to 2 billion KRW this year, increasing the property tax burden from 5.37 million KRW to 6.65 million KRW, a 1.28 million KRW (24.86%) rise. In nearby Apgujeong-dong, the official price of Shinhyundai 9th Complex with an exclusive area of 111㎡ increased from 2.76 billion KRW last year to 3.476 billion KRW this year, raising the property tax from 13.28 million KRW to 18.48 million KRW, a 5.2 million KRW (39.2%) increase.
◆ Seoul Apartment Official Prices Rise 7.86% = The Ministry of Land announced the day before that the official prices of apartments (approximately 15.58 million households) as of January 1 this year increased by 3.65%. In particular, Seoul saw the highest increase nationwide at 7.86%. High-priced apartments in the Gangnam area rose sharply, widening the gap with the Gangbuk area. Within Seoul, Seocho-gu (11.63%) saw the largest increase, followed by Gangnam-gu (11.19%) and Seongdong-gu (10.72%). In contrast, Dobong (1.56%), Gangbuk (1.75%), and Guro (1.85%) experienced increases in the 1% range.
The higher the price of the apartment, the greater the property tax burden. Property tax increases progressively as the official price exceeds certain thresholds, and if the official price exceeds 1.2 billion KRW (for single homeowners), an additional comprehensive real estate tax is imposed. The official price of Eperno Cheongdam (464.11㎡), which earned the title of the most expensive apartment this year, rose 55% from 12.86 billion KRW last year to 20.06 billion KRW this year. Consequently, the property tax increased by 50%, from 144.71 million KRW to 213.86 million KRW.
After the lifting of the land transaction permission zone, the property tax burden for Jamsil Els 84㎡ in Jamsil-dong, Songpa-gu, which has been fluctuating, will increase by 21%, from 4.78 million KRW to 5.79 million KRW. The official price rose 14% from 1.63 billion KRW last year to 1.865 billion KRW this year.
Property taxes for apartments in Mapo, Yongsan, and Seongdong districts are also expected to rise by more than 10% compared to last year. For example, Mapo Raemian Prugio 84㎡ in Ahyeon-dong, Mapo-gu, which did not pay comprehensive real estate tax last year because the official price was below 1.2 billion KRW, saw its official price increase by 14.9% from 1.145 billion KRW last year to 1.316 billion KRW this year. The property tax is analyzed to rise by 17.5%, from 2.44 million KRW to 2.87 million KRW.
◆ Polarization of Official Prices Widens the Gap in Property Tax Burdens = On the other hand, property tax increases for housing in the Gangbuk area of Seoul showed single-digit growth rates. The property tax for Daesang Town Hyundai Apartment 84㎡ in Banghak-dong, Dobong-gu, rose by 1.0% to 620,000 KRW. The official price of this apartment increased by 0.8% from the previous year to 520 million KRW this year. For Doosan We've Trigeum 84㎡ in Mia-dong, Gangbuk-gu, the official price rose 3% to 516 million KRW, increasing the property tax burden from 620,000 KRW last year to 650,000 KRW this year, a 4.0% rise.
Looking at official prices by region, among the 17 metropolitan cities and provinces, seven saw average official prices rise, while ten experienced declines. Notably, Sejong recorded the highest increase nationwide last year at 6.44%, but this year it saw the largest drop (-3.28%). Daegu, Busan, Gwangju, Jeonnam, Gyeongbuk, Gyeongnam, and Jeju have seen official prices decline for three consecutive years. Accordingly, the property tax burden is also expected to change.
Lee Eun-hyung, a research fellow at the Korea Institute of Construction Policy, predicted that the market impact would not be significant since official prices already reflected last year’s transaction price changes. He said, "Although the official price change rate this year increased more than last year’s 1.52%, considering that prices fell by 18.6% in 2023, this can be seen as a natural market recovery process. Given the rebound in Seoul apartment prices in the first half of last year, this result was expected." He added, "Among Seoul’s 25 districts, some showed increases exceeding 10%, while others had only 1% growth. Regional polarization will deepen going forward."
Ko Jong-wan, director of the Korea Asset Management Research Institute, said, "The temperature difference between regions has become even greater. Areas where housing prices rose significantly last year saw official prices increase, while regions like Sejong City, where prices dropped sharply, saw official prices fall accordingly." He added, "The polarization between Gangnam and non-Gangnam areas, as well as between Seoul and other provinces, is expected to continue this year."
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