Apartment Land Transaction Permit Applications Drop 32% in May After End of Capital Gains Tax Exemption

Surge in Late Applications for Capital Gains Tax Exemption in April
Followed by a 32% Plunge in Land Transaction Permit Applications in May

The Seoul Metropolitan Government announced on June 11 that the number of new apartment land transaction permit applications last month decreased by 32% compared to the previous month.

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

According to the city, there were 6,087 new apartment land transaction permit applications in May, a significant decline from 8,952 in April.

The city analyzed that the number of listings surged ahead of the end of the temporary exemption on heavy capital gains tax for owners of multiple homes, which expired on May 9, and then dropped back to previous levels thereafter. In fact, more than half of the monthly applications—3,213—were concentrated in the first week of May, which included the application deadline for the tax exemption, while only 2,874 applications were submitted over the remaining three weeks.

By region, the city observed that transaction flows, which had previously expanded to outer districts due to lending regulations, shifted toward the Gangnam 3 districts (Gangnam, Seocho, and Songpa), Yongsan-gu, and the Han River Belt areas as the end of the exemption period approached.

The application share of outer autonomous districts in Seoul, excluding these core areas, had expanded to 67.5% as of February, but declined to 55% in the first week of May. In contrast, during the same period, the share for the Gangnam 3 districts and Yongsan-gu rose from 10.9% to 20.7%, and for the seven Han River Belt districts, it increased from 21.6% to 24.2%.

This trend is interpreted as being driven by an increase in sales transactions aimed at tax savings in areas with a high concentration of expensive listings ahead of the end of the capital gains tax exemption. In fact, after the exemption ended in the second week of May, the share for the Gangnam 3 districts and Yongsan-gu fell back to 12.2%.

From January to the first week of May, there were a total of 12,165 apartment land transaction permit applications. Of these, 3,311 cases—accounting for 27.2% of the total—were applications for temporary exemption from the obligation to reside, submitted as listings by owners of multiple homes.

This proportion was higher in the seven Han River Belt districts (38.2%) and the Gangnam 3 districts and Yongsan-gu (25.5%) compared to the 10 Gangbuk districts (23.6%) and the four southwestern districts (22.6%). This indicates that listings by owners of multiple homes seeking to avoid capital gains tax were concentrated in areas with a high density of expensive apartments.

Land Transaction Permit Application Price Month-on-Month Change Rate. Seoul Real Estate Policy Development Center

An analysis of the prices for land transaction permit applications in May showed that the average price increased by 1.5% from the previous month. After turning to a downward trend in March, prices have risen for two consecutive months. The increase was highest in the four southwestern districts at 2.08%, followed by the 10 Gangbuk districts (1.72%), the seven Han River Belt districts (1.36%), and the Gangnam 3 districts and Yongsan-gu (0.81%).

Since the implementation of the land transaction permit system across all of Seoul in October last year, the cumulative number of applications reached 43,266 as of May. Of these, 41,453 cases, or 95.8%, have been processed.

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