Seoul Luxury Homes Cool as Tax Reforms Bite, Outer Areas Rise

Seoul's luxury real estate market is showing signs of cooling, with apartment prices in the affluent districts of Seocho and Gangnam experiencing a downturn for the first time in 14 and 16 weeks, respectively. This shift follows the government's recent announcement of tax reforms that strengthen holding taxes on high-value properties. The increased tax burden appears to be prompting owners of expensive homes to lower their asking prices, leading to a noticeable decrease in the overall price index for these areas.

Evidence of this trend is emerging in the form of reduced asking prices for high-end properties. For instance, a unit in the prestigious Apgujeong Hyundai apartment complex in Gangnam, previously listed at 11.9 billion won in July, was later listed for 9.2 billion won after the tax reform announcement. Similarly, a unit in Seocho Prugio Summit in Seocho saw its asking price drop from 4.5 billion won to 3.6 billion won. These significant price adjustments reflect a growing number of sellers attempting to offload properties amidst the heightened tax environment.

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In some areas, a wait-and-see attitude emerged, and downward transactions occurred, but upward contracts were signed centered on large complexes and areas near stations with steady demand, leading to an overall increase in Seoul.

In contrast to the slowdown in prime Seoul locations, apartment prices in other parts of the capital and surrounding regions are continuing to climb. Areas like Jungnang-gu, Seongbuk-gu, Seodaemun-gu, Jung-gu, and Gangbuk-gu are experiencing robust price increases, driven by demand for properties in large complexes and near subway stations. The broader Seoul market still shows an overall increase of 0.21% week-on-week, according to the Korea Real Estate Board.

Meanwhile, the provincial market also shows mixed trends. Gyeonggi Province saw a slight deceleration in its price increase rate, though areas like Jungwon-gu in Seongnam and Byeongjeom-gu in Hwaseong remain strong. Incheon's market is also experiencing a slowdown. The rental market in Seoul is also showing signs of cooling, with Gangnam-gu experiencing a price decrease for the first time in 18 weeks, although other districts continue to see rental price hikes. The real estate board noted that while some price adjustments are occurring, demand remains steady in large complexes and transit-accessible locations, supporting continued price increases in those segments.

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In some complexes, price-adjusted transactions were signed, while upward transactions were centered on areas near stations, large complexes, and preferred complexes.