Seoul Apartment Permit Applications Down 10%: "Urgent Sales Absorbed, End-User Transactions Prevail"

5,382 Land Transaction Permit Applications Filed in June
Down 10.9% from Previous Month, Declining Trend Continues
Owner-Occupancy Exemption Accounts for 5.2% of Total

Amid the upcoming end of the temporary suspension of heavy capital gains tax on owners of multiple homes and the anticipated tax reforms, the number of land transaction permit applications for apartments in Seoul last month dropped by more than 10% compared to the previous month. On the other hand, after the liquidation of urgent sales aimed at tax savings, the market saw a continuation of regular transactions based on existing asking prices. As end-user demand shifted to the Gangbuk area, the monthly price increase rate for permit applications across Seoul reached its highest level since the permit system was implemented citywide.

Sale, Jeonse, and Monthly Rent Listings Posted at Real Estate Agencies in Gangnam-gu, Seoul. Photo by Yonhap News

June Land Transaction Permit Applications for Seoul Apartments Down 10.9% from Previous Month

The Seoul Metropolitan Government announced on July 10 that there were 5,382 new land transaction permit applications for apartments in Seoul last month. This represents a 39.7% decrease from the peak of 8,925 applications in April and a 10.9% decrease compared to the previous month, when there were 6,043 applications.

Since the implementation of the citywide land transaction permit system in Seoul in October of last year, the cumulative number of applications through the end of last month stood at 48,564, with 46,454 cases (95.7%) having been processed.

The average daily number of land transaction permit applications per week in June fell back to the level prior to the announcement of the temporary suspension of heavy capital gains tax for owners of multiple homes. A city official explained, "This is attributed to a temporary surge in applications ahead of the end of the tax suspension, followed by a decrease in demand, as well as market participants taking a wait-and-see approach in anticipation of the July tax reforms."

As of the 30th of last month, the number of applications and processed cases for land transaction permits. Statistics for applications submitted since October 20 of last year. The number of processed cases includes not only those received in the corresponding month but also those processed from applications submitted in the previous month. Seoul City

Diverging Transaction Shares between Gangnam and Gangbuk

By region, the share of land transaction permit applications in the three Gangnam districts and Yongsan-gu decreased, while the proportion of transactions centered in the Gangbuk area increased.

The share of applications from the three Gangnam districts and Yongsan-gu dropped from 16.7% in May to 13% in June. In contrast, the share from the 10 Gangbuk districts expanded from 41.5% to 46.2%. The share from the seven Hangang Belt districts edged down from 23.9% to 22.3%, while the four districts in the southwestern region maintained a similar level at 18.5% compared to the previous month.

A city official stated, "After the end of the temporary suspension of heavy capital gains tax, tax-saving transactions in the Gangnam area have declined. At the same time, transactions are shifting toward the Gangbuk area and outskirts, where there is less financial burden from loans and greater demand from end-users."

Gangbuk Leads in Applications for Exemption from Owner-Occupancy Requirement for 'Homes with Tenants'

Since last month, there have been 279 applications for exemption from the owner-occupancy requirement for 'homes with tenants,' accounting for 5.2% of all applications.

By region, the 10 Gangbuk districts had the highest number with 115 applications, followed by the seven Hangang Belt districts with 72, the three Gangnam districts and Yongsan-gu with 65, and the four southwestern districts with 27. The proportion of applications seeking exemption from the owner-occupancy requirement was highest in the three Gangnam districts and Yongsan-gu at 9.3%, followed by the Hangang Belt districts at 6.0%, Gangbuk at 4.6%, and the southwestern region at 2.7%.

This is the first set of statistics compiled since the amendment of the Enforcement Decree of the Act on Report of Real Estate Transactions in May, which expanded the exemption from the owner-occupancy requirement for homes with tenants. The current proportion of such applications is lower than during the previous suspension of heavy capital gains tax for owners of multiple homes, when the exemption applications accounted for 21.7%.

Increase in Land Transaction Permit Application Prices in June

The average price of land transaction permit applications submitted across Seoul last month rose by 2.67% compared to the previous month. This increase is larger than that seen in May (1.87%) and marks the highest monthly rise since all of Seoul was designated as a land transaction permit zone under the October 15 policy measures.

Seoul-wide apartment permission application price month-on-month change rate. Seoul Real Estate Policy Development Center

A city official analyzed, "After the majority of urgent sales for tax-saving purposes were absorbed ahead of the end of the temporary suspension of heavy capital gains tax, the market shifted to regular sales maintaining existing asking prices, leading to a continued influx of end-user buyers and a sustained upward trend."

By region, the upward trend spread across Seoul, with the Gangnam area rebounding after the urgent sales were cleared out and the non-Gangnam areas remaining strong on the back of end-user demand.

The three Gangnam districts and Yongsan-gu saw prices rise by 3.10% from the previous month as urgent sales were largely absorbed following the reinstatement of the heavy capital gains tax, and regular transactions at existing asking prices increased. The seven Hangang Belt districts also maintained a steady upward momentum, rising 1.89% from the previous month, driven by ongoing demand for high-end properties.

The 10 Gangbuk districts saw a 2.86% increase, and the four southwestern districts rose by 2.89% compared to the previous month.

A city official explained, "The ongoing influx of end-user buyers, particularly for mid- to low-priced apartments, has contributed to continued upward momentum in non-Gangnam areas, spreading the price increase trend across all of Seoul."

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