"Sell Before Taxes Rise"...Half of Gangnam Apartment Sales Involve Properties Held for Over 10 Years

Court Registration Data
Properties Held Over 10 Years Account for 41% of All Sales
Tax Burden Drives Trend... Seocho and Gangnam Lead the Rankings

Last month, the proportion of apartment, multi-family, and officetel transactions in Seoul involving properties held by the seller for over 10 years reached its highest level to date. This trend is interpreted as long-term owners deciding to sell, as the government has consistently signaled its intention to reinstate the capital gains tax surcharge for owners of multiple homes and to increase property tax burdens. In the Gangnam area, including Seocho-gu, such transactions accounted for nearly half of all deals.

According to an analysis of data from the Court’s Real Estate Registration Information Plaza on June 10, there were a total of 9,507 applications for transfer of ownership registration for collective buildings in Seoul last month. Of these, 3,895 transactions, or 41.0% of the total, involved properties held by the seller for more than 10 years, marking the highest monthly proportion since the court began compiling these statistics in 2010. Until the 2010s, this proportion remained in the 10-20% range, gradually increasing to 32.8% last year. After rising to the mid-30% range at the start of this year, it surpassed 40% for the first time in April.

By district, Seocho-gu saw the highest share, with 50.9% of all transactions involving properties held for more than 10 years—over half of the total. This was the highest among the 25 districts in the city. In Gangnam-gu, 49.5% of all transactions were for properties held for at least a decade. Both Gangnam-gu and Seocho-gu are known as the top two districts in Seoul for apartment prices. In Songpa-gu, which is also considered part of the "Gangnam 3 Districts," the proportion reached 43.9%. This phenomenon is not limited to high-priced areas. In Nowon-gu (48.6%) and Dobong-gu (47.7%), both of which have many apartments, the number of long-held properties now being sold has also increased significantly compared to previous years.

The increase in long-term owners selling their properties is attributed primarily to heavier tax burdens. With the reinstatement of the capital gains tax surcharge for owners of multiple homes last month, sellers are now subject to an additional 20 to 30 percentage points in taxes on any price appreciation since they acquired the property. In addition, there is a growing likelihood that the special long-term ownership deduction may be reduced, as both the government and the National Assembly have signaled the move, making it likely that the deduction amount could decrease in the near future, even if not immediately.

For single-home owners, the current system allows for up to an 80% deduction if the property is held and occupied for more than 10 years. However, President Lee Jaemyung and relevant authorities have openly stated their intention to reduce the deduction rate. Once the outline of the new tax reform is announced next month, the revised tax system is expected to take effect at the end of this year or the beginning of next year, following legislative amendments.

A real estate agency in Songpa-gu, Seoul. Photo by Yonhap News Agency

The increased property tax burden resulting from the sharp rise in publicly assessed values has also played a role. Property taxes and the comprehensive real estate holding tax are assessed based on ownership period and price as of early June. In addition, factors such as the lack of progress in redevelopment projects in most areas outside the Gangnam region, and a diminished outlook for further home price increases due to the growing likelihood of interest rate hikes in the second half of the year, have all contributed to this trend.

An industry official commented, "If a Seoul apartment was purchased before 2016, it was likely at a relatively low price at the time, and the current capital gains would be considerable. For elderly owners who do not have significant liquidity, it may be better to sell now rather than hold onto the property amid rising uncertainty."

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