Seoul Homebuyers Line Up for Sub-$10M Apartments Amid Tax Deadline Rush

"You're here for the fire sale? Please line up at the back and wait your turn."

On the afternoon of March 7, a weekend, some 20 people including newlyweds and those appearing to be in their 30s and 40s formed a long queue at the ground floor of Kyungnam Honorsville apartment complex in Sadang-dong, Dongjak-gu, Seoul. The crowd gathered to view a 84-square-meter unit listed as a distressed sale at 1.16 billion won ($795,000).

Despite being on the ground floor, the unit was priced 200 million to 300 million won below comparable units in the same complex. It was also just 60 million won more expensive than smaller 59-square-meter units, drawing intense buyer interest. Four real estate agencies coordinated viewings by issuing queue numbers, with 16 groups touring the property in scheduled time slots.

"I had heard there were multiple interested buyers, but I was surprised by how many there actually were," said Mr. A, who married late last year.

As apartment listings surge ahead of the reinstatement of heavy capital gains taxes on multiple-property owners, demand is soaring for apartments priced below 1.5 billion won in areas such as Dongjak-gu and Gwanak-gu, where mid-tier housing predominates. These properties, priced around Seoul's median apartment price of 1.1 billion won, have become realistic options for end-users seeking homeownership due to their relative affordability and less stringent lending restrictions compared to high-end properties.

Scenes of buyers rushing to agencies at opening time and forming long lines after work to secure discounted listings from multi-property owners have become commonplace.

According to the Ministry of Land, Infrastructure and Transport's transaction database on March 12, of the 4,776 Seoul apartment transactions in February, 3,929 units, or 82.3%, were priced below 1.5 billion won. Units at 900 million won or below accounted for 2,482 transactions (52.0%), while those between 900 million and 1.5 billion won totaled 1,447 (30.3%).

While distressed sales in high-priced areas such as Gangnam, Seocho, Songpa and Yongsan are failing to attract buyers and seeing price declines, districts with more sub-1.5 billion won apartments—including Gwanak-gu, Seongbuk-gu and Seodaemun-gu—are experiencing brisk transactions and accelerating price gains. Even in regulated zones, buyers can obtain mortgage loans of up to 600 million won for properties under 1.5 billion won, fueling fierce competition.

A 59-square-meter unit at Shindonga Apartment in Sadang-dong, Dongjak-gu, recently listed at 1.4 billion won, attracted a flood of buyers as it was priced 50 million to 70 million won below other listings.

"I heard there were remodeling prospects in this area, so I came as quickly as possible," said Mr. B. "But as soon as I finished viewing, other agents and clients were already walking in the door. Even though the price is 200 million won above recent transaction prices, there are so many interested buyers that I'm feeling anxious."

Distressed properties are selling almost immediately upon listing. At Changsin Doosan Apartment near Dongmyo Station in Jongno-gu, a 59-square-meter unit was listed at 880 million won—40 million won below recent transaction prices.

"So many people wanted to see it that we split viewings over two days, but it sold on the first day," said the head of a nearby agency. "Those on the waiting list were left empty-handed."

An agent near Kyungnam Honorsville in Sadang-dong said: "A 59-square-meter unit was snapped up immediately after being listed at 1.05 billion won. First come, first served."

"Open runs"—rushing to agencies at opening—have become routine. At e-Pyeonhan Sesang in Gwanak-gu, young newlywed couples swarmed a brokerage as soon as it opened late last month.

"When a 59-square-meter unit came up as a fire sale at 1.28 billion won, six groups came to view it, and it was under contract the next day," said an agency representative. "Even now, weekend appointments are fully booked in one-hour slots from 10 a.m. to 5 p.m."

With buyer demand concentrated on sub-1.5 billion won apartments, sellers and brokers are increasingly dictating terms. Mr. Lee, in his 30s, said: "When I said I'd come after work, the agency told me not to bother if I was coming that late. They didn't seem to care—buyers are lining up, and they know it'll sell quickly anyway."

Nam Hyuk-woo, a real estate researcher at Woori Bank, said: "If polarization was the keyword for the housing market last year, this year we're seeing a 'catch-up rally' as high-end property prices stall while apartments under 1.5 billion won continue to rise steadily."