"Capital Gains Tax Surcharge Lifted" Gangnam Homeowners Retract Listings

Transition Team to Temporarily Exclude Heavy Transfer Tax
Simultaneous Decrease in Jeonse and Monthly Rent Listings

[Asia Economy Reporter Jo Gang-wook] Apartment owners in the Gangnam 3 districts of Seoul?Gangnam, Seocho, and Songpa?known for their high concentration of luxury housing, are withdrawing their listings from the market. This is interpreted as a reaction to the Presidential Transition Committee's plan to temporarily exclude multi-homeowners from the heavy capital gains tax. Additionally, as the committee has decided to completely revise the ‘Lease 3 Laws’ regulating private housing lease contracts, the number of jeonse (long-term deposit lease) and monthly rental listings is also decreasing simultaneously.

According to real estate big data firm Asil's statistics on the 4th, the number of apartment listings in Seoul (excluding jeonse and monthly rentals) was 50,978 as of that day, down by 559 listings (-1.1%) from 51,537 on the 31st of last month when the committee officially announced the one-year capital gains tax relief for multi-homeowners. Among Seoul's 25 districts, Gangnam-gu saw the largest decrease in listings, dropping by 187 (-4.6%) in just four days, ranking first in the decline rate. Seocho-gu was second (-3.3%), followed by Gangbuk-gu (-2.8%), Songpa-gu (-2.5%), and Geumcheon-gu (-2.1%). In terms of the number of listings reduced, Gangnam-gu and Seocho-gu (125 listings), and Songpa-gu (80 listings)?the Gangnam 3 districts?ranked first to third respectively. Notably, during this period, the Gangnam 3 districts accounted for 392 fewer listings, representing 70% of Seoul's total decrease.

The decrease in listings mostly occurred in redevelopment complexes. For example, Jamsil Jugong Complex 5 saw its listings nearly halved from 144 to 80, showing the highest reduction rate. This was followed by Tower Palace Phase 3 (-31.1%), Banpo Mido Phase 1 (-30.5%), Gaepo Hanshin (-29.8%), and Samsung Hillstate Complex 2 (-29.1%). Among the top 10 complexes in Seoul with the largest listing decreases, the top nine are all located within the Gangnam 3 districts. Conversely, only five districts out of 25 saw an increase in listings during this period: Mapo-gu (1.4%), Nowon-gu (0.3%), Seongbuk-gu (0.2%), Guro-gu (0.1%), and Gwangjin-gu (0.1%).

In the market, despite the capital gains tax relief for multi-homeowners, the reduction in listings is interpreted as a sign of growing caution among homeowners. Some multi-homeowners may be holding out, anticipating further property tax relief measures from the government. During the Moon Jae-in administration in 2020, a similar one-year deferral of the capital gains tax hike for multi-homeowners was announced, but the expected surge in listings did not materialize.

Lee Eun-hyung, a senior researcher at the Korea Construction Policy Institute, said, "Excluding the capital gains tax hike could lead to some increase in listings," but added, "Since further deregulation is still possible, there is currently no reason to sell in the Gangnam area." The expectation that housing prices will continue to rise sustains the preference for owning a ‘smart single property.’

In the rental market, where issues such as the revision of the Lease 3 Laws (right to request contract renewal, rent ceiling system, and rental reporting system) and the revival of the private registered rental system are emerging, listings are also disappearing. According to Asil, the number of jeonse and monthly rental apartment listings in Seoul was 42,799 on the day, down 9.48% from 47,282 on the 31st of last month. Jeonse listings decreased from 29,076 to 22,611 (10.09%), and monthly rental listings dropped from 18,206 to 16,388 (11.09%). This is also interpreted as multi-homeowners withdrawing listings or postponing contracts in anticipation of policy benefits. The committee is reportedly considering incentives such as tax benefits for landlords who extend contract periods or minimize rent increases.

A representative from a real estate agency in Yeongdeungpo-gu said, "Many landlords have been troubled by the right to request contract renewal, but with talks of revising or abolishing the Lease 3 Laws, the mood is to wait for clearer regulatory outlines before signing new contracts."

This content was produced with the assistance of AI translation services.