Gangnam's "Bold Sellers" Disappear as the Buyer’s Market Arrives [Real Estate AtoZ]

Supply and Demand in Gangnam 3 Districts Reach Equilibrium
Seoul Apartment Sales Index Falls to Baseline
"Owning a Home Is a Burden"... Government Ramps Up Pressure

The seller's advantage in Gangnam 3 Districts (Gangnam, Seocho, Songpa)-the barometer of the Seoul apartment market-has collapsed after a year. As the government tightens its grip not only on owners with multiple properties but also on single-home owners who don't reside in their properties, homeowners who once held out in unwavering faith in Gangnam's invincibility have begun to list emergency sales at reduced prices.

According to the Korea Real Estate Board on March 1, the Apartment Sales Supply and Demand Index (a score quantifying the ratio of demand to supply) for southeastern Seoul, including Gangnam 3 Districts and Gangdong District, stood at the baseline of 100.0 in the fourth week of February (as of the 23rd). A score above 100 indicates a seller's market, while a score below 100 signals a buyer's market. After five straight weeks of decline, the index reached the balance point. This is the lowest level in a year, since the first week of February last year (98.7). Until recently, prices for Gangnam apartments were set at the sellers' discretion, but that dynamic has changed. If the index drops even slightly further, the market will fully shift to a "buyers cut prices" phase.

The turning point was the government's tax pressure. On May 9, the temporary relief on the capital gains tax surcharge for owners with multiple homes is set to expire. Once the relief ends, owners of two homes will be subject to a 20 percentage point surcharge on top of the base tax rate, and those with three or more homes will face a surcharge of 30 percentage points or more, with the combined rate including local income tax reaching up to 82.5%.

Jamsil Apartment. Photo by Jo Yongjun

On top of this, President Lee Jaemyung stated on X (formerly Twitter) on February 26 that "we will create a situation where selling is more advantageous than holding for not only owners with multiple homes but also those with a single home for investment or speculation," fueling expectations that a full-scale overhaul of the property holding tax will begin after the June local elections.

For owners with multiple homes, this means a double burden: tax when selling, and tax when holding. As a result, listings are pouring onto the market. According to the real estate big data firm Asil, as of February 28, there were 72,049 apartments listed for sale in Seoul, up 26.1% from a month earlier.

The increase in listings is especially steep in the Gangnam area. In Gaepo-dong, Gangnam District, a 84-square-meter unit (4th floor) at DH Firstier I'Park sold for 3.935 billion won on February 14, but a mid-floor unit is now being offered as an urgent sale for 3.5 billion won-over 400 million won less. This is a case where an owner with multiple homes is trying to quickly dispose of the property while still having a tenant with a jeonse lease. Similarly, in Banpo-dong, Seocho District, a 84-square-meter unit (19th floor) at Raemian One Bailey, which sold for 6.08 billion won in January, now has a mid-floor listing with the asking price dropped to 5.52 billion won.

While listings are surging, transactions have frozen. Most prospective buyers believe "prices will fall further," prompting them to sit on the sidelines. Industry insiders interpret this as FOBO (Fear of Better Option)-the expectation that a better deal may emerge. The anticipation that waiting will yield a better property at a lower price continues to delay purchase timing.

In Seoul, where many areas are designated as land transaction permit zones, considering the time needed for application and approval, mid-March is effectively the deadline to sign contracts to avoid the capital gains tax surcharge. As that point approaches, sellers under pressure are likely to lower asking prices further, making March and April a critical inflection point for the market. Park Wongap, Chief Real Estate Specialist at KB Kookmin Bank, commented, "If concerns about the government's policy direction materialize among owners, the market will fully switch to a buyer's market," adding, "Buyers overwhelmingly feel that purchasing now means buying at a premium."

The market is closely watching how far the price decline originating in Gangnam will spread. Since apartment sale prices in Gangnam 3 Districts and Yongsan District all turned downward in the fourth week of February, there is a strong chance that corrections will spill over to adjacent 'Han River Belt' areas such as Mapo and Seongdong Districts. Nam Hyukwoo, a researcher at Woori Bank's Real Estate Research Center, said, "The stance of 'making selling more advantageous than holding' signals a major overhaul of the property holding tax," and added, "For non-resident single-home owners, further tightening of residence requirements in the revised tax law may add to their burden."

This content was produced with the assistance of AI translation services.