▲ Apartment buildings in the Gangnam area of Seoul
Following the implementation of the increased capital gains tax on May 10, the trading volume of apartments in Seoul for June has decreased significantly compared to the previous month, leading to a deepening wait-and-see sentiment in the market.
As the government prepares a tax reform plan centered on raising property taxes to be announced as early as the end of this month, the market is closely watching the direction of the upcoming tax changes.
According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system on July 19, the number of apartment contracts in Seoul in May reached 8,739 (based on contract date), marking the highest figure for the year.
This transaction volume excludes public institution transactions, which can distort market trends due to contract cancellations and bulk contracts.
The Seoul apartment market saw a surge in trading volume in April with 8,641 transactions, followed by another increase in May, as the government granted a grace period for the capital gains tax increase for those who applied for land transaction permits by May 9 to encourage multiple-home owners to put their properties on the market.
Last-minute contracts were concentrated from mid-to-late May after applicants filed for permits near the May 9 deadline and underwent a local government review period of approximately two to three weeks.
However, trading volume has plummeted in June.
While some of the properties for which sales agreements were made before May 9 appear to have had their contracts carried over to June, the number of reported Seoul apartment contracts for June stood at 4,783 as of July 19, which is only 54.7% of the May figure.
Although there are more than ten days left until the end of this month for June contracts to be reported, current trends suggest that the final volume will likely reach only around 60% of the May total.
The July trading volume also appears likely to fall below that of June, with only 1,287 transactions reported so far.
There is also currently a shortage of properties for sale in the market.
According to Asil, a real estate big data company, the number of apartments for sale in Seoul as of July 19 was 60,768, an 11.3% decrease from the 68,495 recorded on May 9, just before the capital gains tax increase took effect.
This is the result of owners withdrawing properties that had been put on the market to avoid the increased capital gains tax.
The housing market is currently keeping a close eye on the tax reform plan, which is expected to be unveiled as early as the end of this month or early next month.
The atmosphere of the sales market is expected to change depending on the direction of tax increases for multiple-home owners, high-priced housing, and non-resident single-home owners.
(Photo: Yonhap News)
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