Strong Demand for Mid- to Low-Priced Homes with Higher Loan Limits
Multi-Homeowners Seem to Have Sold Properties in Outlying Areas Rather Than Gangnam
In the past few months, as the government’s temporary suspension of the heavy capital gains tax for multi-homeowners nears its end, more than 8 out of 10 apartment transactions in Seoul involved mid- to low-priced homes valued at 1.5 billion won or less. Contrary to the government’s intention to regulate high-priced properties in the Gangnam area, multi-homeowners opted to sell low-priced apartments outside of Gangnam, where the capital gains tax burden is lighter, and instead concentrated their assets into a single high-value property—a strategy known as “one smart home.”
According to the Ministry of Land, Infrastructure and Transport’s real transaction price system on May 17, apartments in Seoul sold for 1.5 billion won or less accounted for 81.6% of all reported sales contracts from February this year—when tax-related selling started in earnest—through May 16. This is a 3.4 percentage point increase from the previous three months (November last year to January this year), when apartments priced at 1.5 billion won or less accounted for 78.2% of transactions. In contrast, the share of higher-priced apartments—those between 1.5 billion and 2.5 billion won (13.2%), and those over 2.5 billion won (4.7%)—declined across the board.
Sale Prioritization in Nowon and Gangseo Over Gangnam… Focus on Reducing the Number of Properties Owned
This concentration on mid- to low-priced homes is the result of multi-homeowners’ tax-saving strategies combined with the government’s stringent lending restrictions. After President Lee Jaemyung announced the end of the temporary capital gains tax relief for multi-homeowners via social media in January, the number of Seoul apartment listings surged, at one point surpassing 80,000.
However, as transactions for high-priced homes stalled due to regulatory restrictions and tightened lending, multi-homeowners rushed to offload properties in outlying areas where the capital gains tax burden was lower. In fact, within the properties priced at 1.5 billion won or less, the proportion of those sold for 600 million won or less (23.6%) and those sold between 600 million and 900 million won (28.7%) increased noticeably compared to the previous period.
In particular, in Nowon District—where, until early May, gap investments involving tenants were allowed only for people without homes—there were 920 contracts signed in April alone, more than three times the city’s district average of 290, making Nowon the leader in transaction volume. As transactions shifted toward mid- and low-priced properties, the average transaction price for Seoul apartments fell to 1.09846 billion won, about 80 million won lower than the previous average of 1.18834 billion won.
As Heavy Capital Gains Tax Returns, Permit Applications Halved… Market Pauses
From January 23, when the President mentioned the end of the heavy capital gains tax for multi-homeowners, up to the deadline last weekend, a total of about 30,000 land transaction permit applications (29,655) were filed across Seoul’s 25 districts. By district, Nowon had the most applications at 3,507, followed by Gangseo (1,975) and Songpa (1,916); Gangnam (1,341) and Seocho (1,013) ranked much lower. This indicates that wealthy homeowners in Gangnam shifted to gifting properties to their children instead of selling.
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After the grace period ended on May 9 and the heavy capital gains tax for multi-homeowners was fully reinstated on May 10, the market froze immediately. In Nowon District, where there had been about 35 permit applications per day, the number dropped to the teens in mid-May. Gangnam District also fell into the single digits. The number of properties listed for sale also plunged by more than 5,000, dropping from about 68,000 on the day the grace period ended to about 63,000 currently.
This content was produced with the assistance of AI translation services.
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