Seoul's daily average of land transaction permit filings has fallen by more than 40 percent in the month since the moratorium on the capital gains tax surcharge for multi-home owners ended. While the government allowed non-resident single-home owners to trade "listings with tenants" to avoid a transaction freeze, analysts say it was insufficient to stop the slowdown. Seoul apartment prices have continued to climb for 71 consecutive weeks, with upward pressure intensifying as declining listings, shrinking transactions, and a jeonse shortage converge.
According to the Saeol electronic civil affairs window on Wednesday, land transaction permit filings tallied across Seoul's 25 districts from May 10, when the multi-home owner capital gains tax surcharge was revived, through June 10 averaged 190 per day. That marks a 47.4 percent plunge from the daily average of 362 during May 1-9, when filings surged ahead of the surcharge's return, and a 44.1 percent drop from the April daily average of 340. The level has effectively returned to February's daily average of 183.5, when transactions began picking up as multi-home owners flooded the market with discounted listings.
Specifically, in the period from May 10-18, immediately after the surcharge revival, an average of 211 land transaction permits were filed daily, down 41.6 percent from the average just before the moratorium ended. Filings then fell to a daily average of 137 through the latter part of the same month. After the government allowed trading of "listings with tenants" by non-resident single-home owners starting May 29 to revive transactions, filings recovered slightly to a daily average of 221, but fell short of March (276) and April levels.
Compared with April, the district with the steepest transaction contraction over the past month was the Gangnam 3 districts, where high-priced apartments are concentrated. Seocho District received 411 land transaction permit filings during the month of April, but only 135 were filed in the month from May 10, a 67.2 percent plunge. Gangnam and Songpa districts each saw filings drop 55 percent, while Dongjak District fell 52 percent. Gangseo, Yongsan, Seongdong, Dongdaemun, and Mapo districts each saw transactions shrink by more than 40 percent.
This decline in transactions occurred because, starting May 10 when the capital gains tax surcharge returned, homeowners quickly withdrew listings they had put up to avoid taxes. According to real estate platform Asil, Seoul apartment listings numbered 68,495 on May 9, but over the following three days, 1,581, 1,232, and 1,697 listings disappeared respectively. As of Wednesday, Seoul apartment listings stood at 61,537, a monthly decline rate of 10.2 percent (6,958 units).
With multi-home owners no longer having reason to sell at discount, they are raising asking prices. According to the Korea Real Estate Board, the sale price index rose 0.28 percent, 0.31 percent, and 0.25 percent each week after May 11, immediately following the multi-home owner capital gains tax surcharge, for a cumulative gain of 1.08 percent through Wednesday. This contrasts with the weekly gains of 0.05 percent at minimum and 0.15 percent at maximum in March and April, when transactions of homes owned by multi-home owners were active.
Meanwhile, jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) prices have continued rising, deepening the jeonse and monthly rental crunch. The jeonse increase rate, which rose into the 0.20 percent range starting in the fourth week of April, widened to 0.28 percent and 0.29 percent after May 9, then reached 0.32 percent in the second week of June (as of June 8). The cumulative jeonse price increase over the past month was 1.18 percent, exceeding the 1.08 percent increase in sale prices. The jeonse supply-demand index recorded 121.2 (above 100 indicates supply shortage), breaking through the 120 line for the first time in five years since February 2021.
Experts diagnosed that the listing lock-up caused by the capital gains tax surcharge revival is raising price pressure amid an already aggravated rental market from supply shortages. Shin Bo-yeon, a professor of real estate AI convergence at Sejong University, noted, "Sellers are holding to previous peak prices, while buyers are waiting only for price corrections along with expectations that the government will issue additional measures, so the gap in expectations between the two sides keeps widening."
With listing lock-up and declining transactions continuing, the prevailing view is that home price gains will persist. According to the Korea Real Estate Board, Seoul apartment sale prices rose 0.27 percent in the second week of June, rising for 71 consecutive weeks. Yoon Ji-hae, head of the research lab at Budongsan114, said, "Right now, the psychological aspects of sellers and buyers are largely reflected in advance, while the listing lock-up effect is less reflected. The direction of home prices could change depending on whether tenants who recover large sums such as jeonse deposits at lease maturity remain in jeonse or monthly rent, or try to switch to purchasing."
Home prices are continuously rising not only in Seoul but also in Gyeonggi Province. In particular, the home price surge is steep in the southern Gyeonggi region, which is reaping significant benefits from the semiconductor boom. The apartment sale price index in Dongtan, Hwaseong, rose 1.98 percent in the second week of June, more than tripling from the previous week (0.60 percent). This is seven times Seoul's home price increase rate and about 10 times the Gyeonggi average (0.20 percent).
However, some observe that if the holding tax is raised amid the government's announced tax reform, discounted listings could re-emerge, mainly among the elderly, slowing or stabilizing the home price gains. Professor Shin explained, "Until the tax reform plan emerges around the end of next month, the current wait-and-see stance is likely to continue. If a strong real estate tax reform is implemented and additional supply measures emerge, home prices could undergo a correction."
