Seoul Apartment Transactions Freeze Under Lending Curbs and Tax Burden... LTP Applications Hit Record Low

3,012 Applications in August, Down 34.8% From Previous Month
Four Consecutive Months of Decline

Prices Fall in Gangnam, Yongsan, and the Southwestern Districts
Rise Continues in Han River Belt and Northern Districts

Last month, the number of apartment land transaction permit applications in Seoul fell to its lowest level since the designation of land transaction permit zones (referred to as land permit zones) across the city. The rapid implementation of the government’s tightened lending regulations, rising interest rates, and sweeping tax reforms has led to a sharp contraction in Seoul’s apartment transaction market.

In August, the number of apartment land transaction permit applications in the Seoul area recorded the lowest since the designation of the land transaction restricted area throughout Seoul in October last year. A panoramic view of the Nowon district in Seoul, where mid- to low-priced apartments are concentrated. The Asia Business Daily database

On the 14th, the Seoul Metropolitan Government announced that the number of land transaction permit applications for apartments in Seoul last month totaled 3,012. This marks a 34.8% decline from July’s 4,618 applications and is the lowest monthly figure since Seoul was designated as a land permit zone citywide in October last year. After peaking at 8,896 applications in April, monthly permit applications fell for four consecutive months: 6,011 in May, 5,277 in June, 4,618 in July, and continuing to decline in August.

The Seoul Metropolitan Government explained that transaction volume has dropped since the end of the temporary exemption from increased capital gains tax on multiple-home owners in May. Additionally, the burden of securing funds due to the base interest rate increase and stricter lending regulations contributed independently to a slump in transactions. Furthermore, the postponement of finalizing the August 3 tax reform bill—which includes stronger holding and capital gains tax measures for multiple-home owners and non-resident single-home owners—caused both buyers and sellers to take a wait-and-see approach, further reducing the number of applications.

The decrease in land transaction permit applications was observed throughout Seoul. In the seven districts of the Han River Belt, permits dropped by 38.6%, from 1,023 in July to 628 in August. The four districts of the southwestern region also declined by 38.6%, from 913 to 561 over the same period. In the three Gangnam districts plus Yongsan, applications decreased by 34.6%, and in the ten districts north of the river, the decrease was 31.4%.

By region, the ten Gangbuk districts accounted for 48.8% of applications, nearly half of the citywide total. Mid- to low-priced homes—which face less stringent lending barriers and lower property holding tax burdens—continue to lead the Seoul transaction market.

Among all land transaction permit applications, those filed for “homes with tenants” in order to request a waiver of the actual residence requirement accounted for 4.5%, or 135 cases, maintaining a similar ratio to the previous month. Although the government has relaxed the occupancy requirement to encourage listings from non-resident single-home owners, its effects on the transaction market remain minimal so far.

The average price of apartments for which land transaction permit applications were made last month rose by 0.17% from the previous month, continuing the upward trend. In particular, a decoupling of prices is underway, as increased demand for so-called “less-than-prime” single apartments and concerns over further price hikes are driving buying interest.

Apartment prices in the three Gangnam districts and Yongsan, which are affected by increases in comprehensive real estate holding tax rates, fell by 0.34%. The four southwestern districts also dropped by 0.99%, due to the burden of recent steep price increases. In contrast, real demand continued to support price rises of 0.52% in the Han River Belt’s seven districts and 0.61% in the ten Gangbuk districts.

Meanwhile, to minimize the information gap in the real estate market during the land transaction permit period before housing contracts are finalized, the Seoul Metropolitan Government publicly releases every month the current status of land transaction permit applications and price fluctuations in all 25 districts, enabling citizens to monitor market conditions more closely.

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