Gangnam Sluggish Despite Price Cuts... Spotlight on 'Homes Under 600 Million Won'

[Anchor]

It is time for Friendly Economy on Tuesday with reporter Han Jiyeon. Han, the transaction trends for Seoul apartments seem to be continuing in a similar pattern lately.

[Reporter]

Looking at apartment sales in Seoul following the government's tax code revision proposal, 8 out of 10 homes were priced at 1.5 billion won or less.

There is a saying these days that people house-hunting in Seoul check how much mortgage loan they can get before looking at the actual house price.

Analyzing actual transaction prices from the Ministry of Land, Infrastructure and Transport, apartments priced at 1.5 billion won or less accounted for 79% of contracts signed in Seoul since August, an even larger proportion than last year.

Why 1.5 billion won specifically? Naturally, because of loans.

Currently, if a home is priced at 1.5 billion won or less, you can borrow up to 600 million won. But if it slightly exceeds 1.5 billion won, the limit drops sharply to 400 million won, and for homes over 2.5 billion won, it plunges to 200 million won.

On top of this, with lease and jeonse (lump-sum housing deposit) listings becoming scarce, the impact of tenants switching to buying homes instead is also significant.

Conversely, transactions for expensive apartments have decreased.

Since the government's tax revision proposal released on August 3 aims to raise taxes on ultra-luxury homes, the transaction share for apartments priced over 2.5 billion won shrank from the 8% range down to the 5% range.

In the Gangnam area, some urgent listings priced 1 billion won or more below peak prices have appeared, but prospective buyers are still taking a wait-and-see approach.

In fact, housing prices in Gangnam and Seocho districts have fallen for eight consecutive weeks, while other areas, including Gangbuk, continue to rise.

However, some predict that if the tax revision proposal passes as originally drafted, more people might put their homes on the market to reduce taxes, which could potentially increase transactions in Gangnam after year-end.

[Anchor]

So apartments in relatively lower price ranges are seeing active transactions, right?

[Reporter]

Apartments priced at 600 million won or less are seeing the most activity.

Because this price range qualifies for policy loans with low interest rates, the transaction share has increased noticeably.

Before last year's loan regulations, 1 out of 6 apartments sold in Seoul was priced at 600 million won or less, but after the tax revision proposal, this increased to 1 out of 4.

Policy loans are government-backed loans with low interest rates provided to first-time homebuyers or ordinary citizens.

Products like the Stepping Stone Loan (Didimdol Loan), which you can receive when buying your first home, are available for homes priced up to 600 million won depending on conditions.

Their advantage is having lower interest rates than general mortgage loans.

In the field, as jeonse and monthly rent supplies dwindle, there are frequent cases of young couples using policy loans to buy homes.

On the other hand, transaction shares for apartments priced between 900 million and 1.5 billion won have actually declined.

In this bracket, you can only borrow up to 40% of the home's value. For example, for a 1.2 billion won home, even if you borrow 480 million won, you still need 720 million won in your own funds.

That represents a heavy burden.

Experts believe this phenomenon of Gangnam and Gangbuk, and expensive versus affordable homes moving independently—so-called decoupling—will continue for the time being.

However, some forecast that the gap will gradually narrow as the upward momentum in Nowon, Dobong, and Gangbuk districts, which previously led the increases, has recently slowed down.

[Anchor]

The last topic covers apartment property taxes.

[Reporter]

An analysis showed that if the upward trend in house prices continues as it is now, property taxes could increase by more than half, over 50%, by 2030.

This is based on a KB Kookmin Bank simulation.

They examined cases where a household owns a single 30-pyeong apartment across 125 complexes, selecting the top 5 complexes by market price in each of Seoul's 25 districts.

However, certain assumptions were attached.

They assumed that the 10.3% increase rate in Seoul apartment prices from January to September of this year would continue every year for the next four years, and that the property tax assessment ratio would remain at 45% just like now.

It should be noted that this is a fairly high assumption.

Calculated this way, the average property tax would rise from about 2.2 million won currently to nearly 3.4 million won by 2030, an increase of over 53%.

For reference, taxes like the local education tax were excluded, and special tax rate reductions for single-home owners with a publicly assessed price of 900 million won or less were not reflected in this calculation, meaning actual taxes for applicable homes could be lower.

What stands out are Nowon, Dobong, and Gangbuk districts.

These were areas where tax burdens were relatively low previously, but the increase rate stands at 76%, much higher than the 47% for the three Gangnam districts.

For example, the property tax for a 32-pyeong unit in Gangbuk District will rise from 810,000 won currently to 1.41 million won.

A significant number of complexes that currently pay under 1 million won will exceed 1 million won.

Even if house prices rise at half this year's pace, the 2030 property tax is projected to increase by nearly 30% compared to now.
※ Please note: This article was translated by AI and may contain errors.