Yangcheon-gu 33-Pyeong Apartment Drops from 2.4 Billion to 2.1 Billion Won... More Listings, Asking Prices Falling [Real Estate AtoZ]

Listings Increasing as Heavy Capital Gains Tax Hits Multi-Home Owners
18 Billion Won Asking Price in Mapo-gu Trades at 1.71 Billion Won
"Wait-and-See Stance Emerging on Expectations of Further Price Declines"

On the 5th, an urgent-sale notice for an apartment was posted in front of a real estate agency located within a large apartment complex in Seoul.

"Previously, newly built 33-pyeong apartments nearby (exclusive area of 84 square meters) were quoted at 2.4 billion won. But after the announcement of the heavy capital gains tax on multi-home owners, a listing came out at 2.15 billion won, and now the owner is saying they will even sell for 2.1 billion won." (A-certified real estate agent in Sinjeong-dong, Yangcheon-gu, Seoul)

Since the government's plan to impose heavier capital gains tax on multi-home owners was finalized, the market has been seeing a noticeable increase in listings from such owners. Some are cutting their asking prices by hundreds of millions of won, while others, if it is difficult to vacate immediately because there is a tenant, are completing sales by paying a premium as a consolation payment. On the 12th, the government also finalized a supplementary measure to defer the owner-occupancy requirement by up to two years, and on the ground, inquiries about selling homes with existing tenants from multi-home owners have been continuing.

For Mapo Taeyoung Apartment, a large complex of 1,992 households located in Daehyeong-dong, Mapo-gu, a unit with an exclusive area of 59 square meters was recently contracted at 1.71 billion won. The previous asking price had been set at 1.8 billion won, but with the grace period for the heavy capital gains tax ending on May 9, a multi-home owner first listed the home at 1.74 billion won, and it was ultimately traded at an even lower price. A nearby real estate agency said, "If there was only one listing before the heavy capital gains tax issue surfaced, now there are more than two to three properties on the market," adding, "There was a buyer willing to pay 1.75 billion won, but now that they think prices will fall further, they have expressed an intention to wait a bit longer."

With the government announcing a supplementary measure that, in cases where there is a tenant, the owner-occupancy requirement will apply only after the lease contract ends, the market expects even more listings to come out. Since Seoul was designated as a land transaction permit zone, buyers must obtain a land transaction permit and move in within four months. Therefore, when there was remaining lease term, transactions were only possible by paying tenants a premium to move out. However, with the new measure to defer the owner-occupancy requirement by up to two years when there is a tenant, it has become somewhat easier for multi-home owners to sell.

According to data from the real estate platform Asil, as of this day the number of apartments for sale in Seoul stood at 62,357. This is the highest level since November 19 last year, when there were 62,504 listings. Compared with 57,001 listings on January 1 this year, the volume has increased by 9.4%. It is also up 12.5% from January 19 this year, when the number of listings was the lowest so far this year at 55,420.

Yoon Sumin, real estate specialist at NH Nonghyup Bank, said, "Because the capital gains tax issue could be followed by issues related to future holding taxes, we expect a large number of listings from multi-home owners who want to quickly escape this burden," adding, "For asking prices that had risen abnormally, we expect to see a process of normalization, either through price declines or by the upward trend coming to a halt."