Seoul's Gangnam luxury property market sees more listings but fewer buyers amid tax and loan concerns

Despite a rise in apartment listings in Seoul's affluent Gangnam 3 districts, potential buyers are scarce, leading to a significant drop in property transactions. Land transaction permit applications, a leading indicator of market activity, fell by 39.1% in the first week of August, reaching the lowest point of the year for the area.

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With the expected increase in holding taxes and the emergence of distressed sales, not many people can afford to buy even if they come up. Due to loan regulations, expensive apartments in Gangnam have become exclusive to high-income earners with billions of won in cash.

Across Seoul, land transaction permit applications decreased by 22.5% during the same period. These figures indicate a broader market slowdown, with applications in both Gangnam 3 and the wider Seoul area reaching their second-lowest point this year, surpassed only by the short Lunar New Year holiday week. This trend suggests a market characterized by increased inventory but subdued demand.

The downturn is attributed to several factors, primarily stricter loan regulations and anticipated increases in property taxes. The current loan-to-value ratios limit mortgages for high-priced properties, requiring buyers to have substantial cash reserves. For instance, purchasing a 3 billion won apartment in Gangnam now necessitates billions of won in personal funds, effectively limiting the buyer pool to the wealthiest individuals.

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Due to loan restrictions, purchasing power is insufficient, and there is an expectation that prices may fall further after major policy announcements, leading the market to observe. Transactions are unlikely to become active. Especially for high-priced homes, price fluctuations can be in the hundreds of millions of won, so buyers do not move immediately even if distressed sales appear.

Real estate agents report that while homeowners are listing more properties due to tax concerns, the lack of accessible financing and the expectation of further price drops are causing potential buyers to adopt a wait-and-see approach. This dynamic is creating a market where sellers are present, but buyers, particularly those reliant on financing, are hesitant to commit, leading to a growing overhang of unsold properties.

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There is not much incentive to buy right now, as owning a home means taking on tax burdens and considering the possibility of additional regulations. When regulations tighten, transaction contraction often follows, so this trend is likely to continue for some time.