Seoul's Gangnam 3 districts see 38% drop in land permit applications post-tax reform; listings up 7%

Following the government's announcement of tax reforms, applications for land transaction permits in Seoul's affluent Gangnam 3 districts (Gangnam, Seocho, Songpa) have plummeted by nearly 40%. Concurrently, the number of available apartment listings has risen by over 7%.

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The number of phone calls asking about tax increases has definitely increased compared to before the tax reform announcement.

Homeowners are showing a greater willingness to sell due to concerns about escalating tax burdens, particularly on high-value properties. Meanwhile, potential buyers are adopting a cautious stance, observing the market for future price movements. From April 4 to April 11, the Gangnam 3 districts received a total of 92 applications for land transaction permits, averaging 11.5 per day. This marks a significant decrease from the previous month's average of 18.7 applications per day, a 38.5% drop.

The reforms, announced on April 3, aim to widen the tax gap based on actual residency and strengthen taxation on high-value and non-resident properties. Changes to long-term capital gains tax deductions will also prioritize residency duration over ownership period, with limits on deduction amounts. Given that Gangnam 3 districts are concentrated with high-value homes, they are particularly sensitive to changes in property and capital gains taxes. For instance, a 60-year-old homeowner with a single property valued at 3.5 billion won (approximately 5 billion won market price) who has resided for 10 years could see their annual property tax (comprehensive real estate tax + property tax) increase from 13.548 million won to 18.794 million won after 2028, according to government estimates.

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Homeowners are listing their properties and waiting to see the market reaction.

Despite the decrease in permit applications, the market has seen an increase in listings. Data from real estate analytics firm Asil shows that the number of apartment listings in the Gangnam 3 districts grew from 22,182 on April 3 to 23,771 on April 12, an increase of 1,589 listings or 7.2%. This suggests that more homeowners are considering selling while monitoring the impact of the tax reforms. However, real estate agents report that sellers are not yet rushing to lower prices, with many preferring to wait and see the market's reaction and the finalization of the tax reform discussions.

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Homeowners with high-value single properties will inevitably weigh the costs and benefits of selling, holding, or gifting their property.

Experts anticipate that the wait-and-see attitude will likely persist until the uncertainties surrounding the tax reforms are resolved. "Homeowners with high-value single properties will inevitably weigh the costs and benefits of selling, holding, or gifting their property," said Nam Hyuk-woo, a real estate researcher at Woori Bank. "We expect an increase in homeowners in key Gangnam areas contemplating their decisions."

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We expect an increase in homeowners in key Gangnam areas contemplating their decisions.