Three New Listings in One Complex Just Two Hours After Government Announcement... Market Still in 'Wait-and-See' Mode Despite Temporary Gap Investment Allowance [Real Estate AtoZ]

More Owners Move to Sell After Government Announcement
Three New Listings in Two Hours in a Single Sanggye-dong Complex
Buyers Expect "More Properties Will Hit the Market"
Seoul Apartment Price Gains Narrow for Second Straight Week

On the 5th, apartment sale notices were posted in front of a real estate agency located within a large apartment complex in Seoul.

Since the government officially announced that it will reinstate the heavy capital gains tax on owners of multiple homes, inquiries from such owners saying they want to put their properties on the market have been increasing. If a household without a home purchases a property owned by a multi-home owner that already has a tenant, it can engage in a form of temporary gap investment until the end of the existing jeonse or monthly rent contract. However, because an increase in listings is expected to lead to price declines, buyers are not rushing in. With the prevailing view that more properties will come onto the market going forward, many are taking a wait-and-see approach. The rate of increase in apartment prices in Seoul has slowed for two consecutive weeks.

In the Daerim Apartment complex in Sanggye-dong, Nowon-gu, Seoul, three new listings appeared within just two hours after the government officially announced on the 12th that it would revive the heavy capital gains tax and introduce accompanying supplementary measures. A local licensed real estate agent said, "Since the news broke that the heavy capital gains tax will be reinstated, we have been receiving continuous calls from owners of multiple homes saying they want to list their properties."

According to data from the real estate platform Asil, as of the 13th, the number of apartments for sale in Seoul stood at 63,745. This represents an increase of 12.9% compared with one month earlier. Among the autonomous districts, Songpa-gu saw the largest increase, with listings up 37.7%. It was followed by Seongdong-gu (32.7%), Gwangjin-gu (28.2%), Gangdong-gu (22.8%), and Seocho-gu (21.8%).

Listings that include jeonse contracts, which have drawn attention due to the temporary easing of the "owner-occupancy obligation," are also noticeable, but this interest is not leading to actual purchases. A real estate office in Sangdo-dong, Seoul, said, "People without homes are technically able to make gap investments (buying with an existing jeonse tenant in place) when purchasing properties from multi-home owners, but things are still quiet," adding, "They are waiting for prices to fall further." A licensed real estate agency in Sinwol-dong, Yangcheon-gu, also reported, "The older the owner of multiple homes, the more they are telling us to hurry up and sell their houses," but added, "There are hardly any inquiries from people who actually want to buy."

At Shindonga River Park Apartment in Noryangjin-dong, Dongjak-gu, which has 1,696 units, the asking prices for units with an exclusive area of 114 square meters are set in the range of 1.7 billion to 1.81 billion won. Owners of multiple homes who wish to sell, rather than cutting the price by several hundred million won to dispose of their homes as urgent sales after the government announcement, are inquiring with agencies about listing their properties by lowering the asking price by around 10 million to 20 million won. A nearby licensed real estate agent said, "Before the official announcement, there were homeowners agonizing over whether they should lower their prices by more than 100 million won," but added, "Most have decided to either keep their asking prices after the Lunar New Year holidays and see how things go, or reduce them only slightly."

The government has allowed buyers to postpone moving in until the end of the lease contract, for up to two years, if there is an existing tenant. Households without homes can make temporary gap investments, but with future price declines widely anticipated, they are said to be watching market conditions for now.

Experts believe the latest government announcement will play a positive role in bringing more properties owned by multi-home owners onto the market. They also assess that it has bolstered demand for home purchases among households without homes. Kim Hyosun, Chief Real Estate Expert at KB Kookmin Bank, said, "The government did not simply declare the end of the grace period; by introducing a clear buffer in the form of the contract-deposit payment criterion and the deferral of the owner-occupancy obligation, it has effectively opened a practical exit route for owners of multiple homes who had been struggling because they could not sell homes with tenants," adding, "We are already seeing the effect of more listings coming onto the market, such as a rapid increase in the number of Seoul apartments for sale in a short period of time, so the volume of properties being sold is likely to keep rising until just before May 9." Kim added, however, "Given that stringent lending regulations remain in place, we will have to see whether this actually translates into an explosive increase in transaction volumes."

The pace of increase in Seoul apartment sale prices has narrowed for the past two consecutive weeks. The main reason cited for the smaller gains is that owners of multiple homes are listing their properties to reduce their tax burden. Based on current trends, some are forecasting that the market will turn downward after the holiday period.