"Not Interested in a Price Cut of Just Tens of Millions" "Won't Sell for 200 Million Less": Gangnam Apartment Transactions Stalled [Real Estate AtoZ]

Homeowners Withdraw Quick Sale Listings
Little Buyer Interest in Slightly Reduced Asking Prices
Government Signals Higher Holding Tax
More Properties on Market, but Land Transaction Applications Down by 100

"A few days ago, a sudden sale property appeared with the price lowered by about 200 million won, and three or four prospective buyers showed interest, but after some hesitation, the homeowner decided to withdraw the listing." (Real estate agent in Gaepo-dong, Gangnam-gu)

"Perhaps because there’s a lot of talk about listing prices falling, even buyers who are interested don't seem very attracted to listings that are only a few tens of millions of won cheaper." (Real estate agent in Banpo-dong, Seocho-gu)

View of apartments in the Gangnam 3 districts from Lotte World Tower in Songpa-gu, Seoul. Photo by Yonhap News Agency

As clear signs of apartment price declines have emerged in the three Gangnam districts of Seoul (Gangnam, Seocho, and Songpa) and in Yongsan-gu, transaction volumes have noticeably dropped. After the announcement of the official apartment prices, it is now a foregone conclusion that the government will revise the tax system to increase the burden of the property holding tax. However, there is a prevailing sentiment among market participants to wait and see. This is interpreted as a desire to observe market trends after the sudden sale properties have been absorbed. With only about two weeks left before the deadline for multi-homeowners to avoid heavy capital gains taxes, there is growing interest in how long this wait-and-see attitude will last.

According to data compiled by the Seoul Metropolitan Government on the number of land transaction permit applications by district as of March 26, there were 680 applications in the Gangnam 3 districts and Yongsan-gu from the beginning of this month through the previous day. This is a decrease of more than 100 applications compared to February, which saw 784 applications. Both periods had the same number of business days, excluding weekends and holidays. Since Seoul apartment transactions are subject to land transaction permits, it takes at least two to three weeks, and sometimes over a month, for an actual deal to be registered after discussions between the seller and buyer. Therefore, the number of land transaction permit applications provides an early indication of the market mood before official transaction data is released.

The noticeable drop in transaction applications appears to reflect the perception that most of the properties the market can absorb have already been listed. After the government confirmed its policy to impose heavier capital gains taxes on multi-homeowners and President Lee Jaemyung signaled a possible increase in the property holding tax, the upward trend in apartment prices has subsided.

Since then, the number of listings has surged, particularly in highly sought-after areas like Gangnam. Properties with reduced asking prices have become increasingly common. Park Wongeap, Senior Real Estate Specialist at KB Kookmin Bank, said, "Buyers are hoping prices will fall further, while sellers are questioning whether they really need to sell at the current price, so both sides are holding out, which inevitably leads to a drop in transactions."

A quick sale advertisement posted at a real estate agency in Gangnam-gu, Seoul. Photo by Yonhap News

In particular, the "wait and see" sentiment has grown stronger since the official appraised prices were determined. With no detailed tax reform plan released yet, real estate agencies report that most participants are waiting to make decisions until more clarity emerges. One agent explained, "In the Gangnam area, transactions generally occur without loans, so most of the sudden sale properties that emerged last month have already been sold. Still, many homeowners are refusing to lower their asking prices. Some are thinking, 'If it doesn't sell by next month, I'll just try again later.'"

From the buyers’ perspective, it is difficult to feel that the asking prices have actually dropped. For instance, in Raemian One Bailey in Seocho-gu, a large unit facing the Han River is currently listed at 15 billion won, down from the previous asking price of 18 billion won. However, there are few transactions for such large units, so the current market price is unclear. The penthouse on the top floor, which is even larger, was sold for 16.5 billion won in February of last year. Although some major complexes in Gangnam have reduced asking prices by hundreds of millions of won, many still perceive the prices as high compared to the previous surge.

The heavier capital gains tax for multi-homeowners will take effect after May 9, but considering the land transaction permit process, sellers and buyers need to reach an agreement no later than mid-April. However, a simple agreement is not enough to avoid the tax; an actual contract must be signed.

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