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Seoul Apartment Market Sees Highest Rate of Price Drops in 16 Months Amidst Tax Changes
🇰🇷 South Korea /Economy & Trade

Seoul Apartment Market Sees Highest Rate of Price Drops in 16 Months Amidst Tax Changes

From Dong-A Ilbo · (2h ago) Korean Critical tone

Translated from Korean, summarized and contextualized by DistantNews.

TLDR

  • A significant portion of Seoul apartment contracts signed in April, 39.6%, were 'downward' transactions, meaning they sold for less than the previous contract.
  • This marks the highest rate of downward transactions in 16 months, indicating a trend of falling property prices.
  • The article details the impact of the end of a temporary measure easing capital gains tax for multiple homeowners, which will lead to significantly higher taxes for those selling property after May 10th.

The South Korean real estate market is at a critical juncture as a temporary measure easing capital gains tax for multiple homeowners expires on May 9th. Dong-A Ilbo reports that downward transactions in Seoul apartments reached 39.6% in April, the highest in 16 months, signaling a clear downturn in the market. This trend is exacerbated by the impending tax hikes, which will drastically increase the burden on multi-homeowners.

Starting May 10th, those owning multiple properties in regulated areas like Seoul will face significantly higher capital gains tax rates. For owners of three or more homes, the tax rate, including local income tax, could soar to a staggering 82.5%. This is a stark contrast to the current situation, where a temporary suspension of the tax surcharge has allowed for more flexible selling conditions.

For many years, residents of these communities have depended largely on river transportation. But with the completion of this road, things will change for the better. Movement will become easier, farmers wil

— Sheriff OborevworiGovernor Oborevwori describing the anticipated positive impact of the new road project on local communities.

Our analysis, commissioned by Dong-A Ilbo, shows a dramatic increase in tax liability for sellers. For instance, a property purchased for 710 million won 10 years ago and now selling for 1.64 billion won would incur a tax of approximately 303 million won under current rules. However, after May 10th, this could jump to 593 million won for a two-homeowner and 695 million won for a three-or-more homeowner – an increase of 96% to 129%. This impending tax burden is forcing many multi-homeowners to rush to sell their properties before the deadline, contributing to the rise in downward transactions and potentially stabilizing the market, albeit through a period of significant financial strain for sellers.

For many years, residents of these communities have depended largely on river transportation. But with the completion of this road, things will change for the better. Movement will become easier, farmers wil

— Sheriff OborevworiGovernor Oborevwori describing the anticipated positive impact of the new road project on local communities.
DistantNews Editorial

Originally published by Dong-A Ilbo in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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