In the months leading up to the government's implementation of a higher capital gains tax, sales of high-end apartments in Seoul surged significantly. This increase was driven by property owners looking to avoid tax burdens, resulting in a record share of transactions exceeding 3 billion won.
According to the Ministry of Land, Infrastructure and Transport's real transaction disclosure system, of the 8,779 apartment transactions in Seoul in May (excluding purchases by public institutions and contract cancellations), 2,446 transactions exceeded 1.5 billion won, accounting for 27.9% of the total. This marks the highest proportion recorded this year.
The share of transactions over 1.5 billion won had decreased from 21.1% in January to 18.9% in February and 16.6% in March. However, it rebounded to 24.2% in April and nearly reached 28% in May.
Transactions of ultra-high-end apartments valued over 3 billion won followed a similar trend, with the number of transactions rising from 156 in March to 442 in April and 514 in May. The share of these transactions also increased, from 4.0% in January and 2.84% in March to 5.11% in April and 5.9% in May, reaching its highest level of the year.
Additionally, transactions of apartments valued over 10 billion won also rose, with seven transactions recorded in May, more than doubling the three transactions in April.
This trend is attributed to property owners of high-value homes selling their properties to avoid the impending capital gains tax hike and increased property taxes on ultra-high-end homes.
Since the government implemented the higher capital gains tax for multiple homeowners on May 10, there has been a concentrated demand from sellers looking to complete transactions before tax burdens increase.
Notably, the influx of urgent sales in high-end complexes has attracted buyers despite lending restrictions. The government's temporary suspension of the residency requirement for land transaction permits for non-homeowners and the decision not to apply the higher capital gains tax to applications submitted by May 9 also contributed to the increase in transactions.
Conversely, following the implementation of the higher capital gains tax, the market appears to be shifting back toward mid- to low-priced properties.
The share of transactions below 1.5 billion won decreased from 83.4% in March to 72.1% in May, but rose again to 76.5% in June. As of July, approximately 82% of reported transactions involve apartments priced below 1.5 billion won.
The share of transactions below 900 million won also fell from 55.1% in March to 44.1% in May, but buying interest has since shifted back toward mid- to low-priced apartments.
The share of transactions over 3 billion won also dropped to 4.6% in June and has remained at 3.2% so far in July, likely due to demand focusing on mid-priced apartments that allow for mortgage loans of up to 600 million won.
Market analysts suggest that the upcoming announcement of tax reform measures this month could lead to an increase in listings of ultra-high-end properties once again.
Meanwhile, according to Real Estate 114, the rapid increase in high-value apartments in Seoul has pushed the share of apartments exceeding 1.5 billion won close to 40%. Following the lending restrictions implemented in October of last year, the share of apartments over 1.5 billion won rose from 32.83% to 39.70%, an increase of 6.87 percentage points as of last month.
In contrast, the share of apartments priced below 1.5 billion won decreased from 67.17% to 60.30%. In terms of the number of units, the count of apartments priced below 1 billion won fell by 126,204, while the number of apartments exceeding 1.5 billion won increased by 75,547, indicating a spread of high-value apartments even beyond the Gangnam area.
* This article has been translated by AI.
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