As official apartment prices surge this year, attention is focused on whether multi-home owners will put their properties on the market. While some predict owners will hold out since additional taxes are not significantly higher compared to home price gains, the prevailing forecast is that multi-home owners will begin selling non-core assets, given cooling housing market sentiment and the government's announced plans to raise property taxes.
According to calculations by Woo Byung-tak, a specialist at Shinhan Premier Pathfinder commissioned by Seoul Economic Daily on the 17th, a person owning both an 84㎡ unit at Eunma Apartment in Daechi-dong, Gangnam-gu and an 81㎡ unit at Jamsil Jugong 5 Complex in Jamsil-dong, Songpa-gu would face property taxes of 42.84 million won this year. This represents a 34.58% increase from 31.83 million won last year.
Beyond the Han River belt, areas with many third-quintile (top 60%) homes such as Seongbuk-gu, Seodaemun-gu, and Gangseo-gu have also seen rising property taxes as home prices increased. A two-home owner with an 84㎡ unit at Punglim i-One in Hawangsimni, Seongdong-gu and an 84㎡ unit at Hanshin Hanjin in Donam-dong, Seongbuk-gu must pay approximately 3.73 million won in property taxes this year, up more than 30% from 2.86 million won last year.
While tax burdens have risen significantly, expectations for housing price increases have also cooled. According to the Korea Research Institute for Human Settlements' consumer sentiment survey on the real estate market, the nationwide housing sales consumer sentiment index for February recorded 112.3, down 9.8 points from the previous month, shifting to a neutral phase.
Last year, despite official Seoul apartment prices rising 7.86% and increasing property tax burdens, multi-home owners released few properties onto the market due to higher expectations for price gains. Indeed, Seoul apartment prices rose 8.98% last year, more than offsetting the property tax burden. Ham Young-jin, head of Woori Bank's Real Estate Research Lab, said, "Multi-home owners will first put properties with low capital gains and rental yields on the market," adding, "Rising official prices will increase 'holding costs' over the long term and amplify selling pressure."