South Korea's heavier capital gains tax on multiple-home owners returned for the first time in four years. Starting Tuesday, those who sell homes in designated overheated areas — all districts of Seoul and 12 areas in Gyeonggi Province — face a tax rate of up to 82.5%, causing listings in those areas to rapidly disappear.
In the real estate industry, comments that "transactions by multiple-home owners are already over" came in one after another. An official at a brokerage near SK Bukhansan City said, "Deals were completed by the 7th, and on Friday and Saturday there were none at all." The head of another nearby brokerage said, "This is the first time listings have been this scarce," adding that "transactions have effectively stopped over the past few days." Seoul apartment listings stood at 66,914 on Tuesday, down 1,581 in a single day.
Most rush sales aimed at saving taxes have already been absorbed, and sellers appear to be holding out despite the tax burden. Buyers are taking a wait-and-see stance, weighing factors such as the possibility of a tax overhaul in July. But some observers say upward price pressure could intensify if demand from buyers unable to find jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) properties shifts toward purchases.
Experts forecast that while the decline in listings will act as a factor pushing prices up, even if not to the point of a sharp spike, it is more likely to result in a transaction vacuum. "Multiple-home owners have already completed much of their response, so the wait-and-see mood will continue until next month," said Yoon Soo-min, a real estate expert at NH NongHyup Bank.
