Gangnam, Seocho Home Prices Fall for 9th Straight Week... Listings in Seoul's Three Gangnam Districts Up 5,000 in Two Months [Real Estate A to Z]

Uncertainty over tax reform brings a wave of distressed listings
Home prices in Songpa fall for the fifth straight week
Listings in Gangnam's three districts rise by 5,700 in two months

Apartment prices in Seoul have risen for 87 consecutive weeks, marking the longest period of increases on record. By contrast, Gangnam-gu and Seocho-gu have each seen prices fall for nine consecutive weeks. The declines are believed to be due to a large number of distressed listings priced below market value coming onto the market as the government’s August 3 tax reform increases the burden of holding property.

According to the Korea Real Estate Board’s weekly apartment market report released on the 11th, apartment sale prices in Gangnam-gu fell 0.34% week over week in the first week of this month, as of October 5. Prices in Gangnam-gu have declined for nine consecutive weeks since falling 0.02% in the second week of August. Seocho-gu also saw prices fall for nine straight weeks after turning downward in the second week of August, when they fell 0.04%. This week, prices dropped 0.27% from the previous week. Songpa-gu saw a 0.19% week-over-week decline, marking five consecutive weeks of falling prices.

The tax reform is seen as a key factor behind the continued price declines, centered on Seoul’s three Gangnam districts. The tax reform proposal announced by the government in August calls for a shift, beginning in 2028, in the long-term special deduction for holding a home from a holding-period-based system to one based on the period of residence, as well as the introduction of a deduction cap. It also includes a temporary easing of the higher capital gains tax rates for owners of multiple homes starting in 2027. Although the proposal has yet to be finalized, it is expected to increase the tax burden on owners of high-priced homes. As a result, large numbers of distressed listings are coming onto the market, particularly from older homeowners in the Gangnam area and owners of multiple homes.

For example, a 59-square-meter unit (24-pyeong type) at Raemian One Bailey in Seocho-gu was listed for 4 billion won, about 700 million won less than its most recent transaction price of 4.7 billion won in August. Two more units were listed at asking prices in the 4.2-billion-won range. A 60-square-meter unit (25 pyeong) at Gaepo Jugong Complex 7 in Gangnam-gu was listed for 2.8 billion won, 260 million won less than its most recent transaction price of 3.05 billion won in June. A 53-square-meter unit (22 pyeong) at Gaepo Jugong Complex 5 in Gangnam-gu was put up for sale as a distressed listing at 3 billion won, 700 million won below the highest asking price of 3.7 billion won for a unit of the same size. Excluding direct transactions, the most recent transaction price was 3.45 billion won in February.

The volume of listings on the market has also surged as large numbers of distressed properties have come up for sale. According to Asil, the number of Seoul apartment listings rose from 22,182 on August 3, when the tax reform proposal was announced, to 27,896 as of October 8, an increase of about 5,700 in two months. By district, listings in Gangnam-gu rose from 9,453 to 11,727 as of October 8, an increase of about 24%. Listings in Seocho-gu increased from 7,630 to 9,701, while those in Songpa-gu rose from 5,099 to 6,468, increases of 31.8% and 26.8%, respectively.

However, an expert said the likelihood that falling prices originating in Gangnam will spread across Seoul is limited. Seoul’s apartment market is showing divergent trends as high-priced homes and mid- to lower-priced homes have become increasingly divided by the impact of stringent lending restrictions and the tax reform. In particular, demand is pouring into mid- to lower-priced apartments worth 1.5 billion won or less on Seoul’s outskirts, driving prices sharply higher.

Park Won-gap, senior real estate expert at KB Kookmin Bank, said, “The tax reform is weakening demand from buyers looking to move up to more desirable areas, so home prices in Gangnam may remain weak through next year.” He added, “Unlike in the past, however, the market is segmented, so falling prices in Gangnam are unlikely to spread immediately to the market for mid- to lower-priced homes worth 1.5 billion won or less.”

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