Gangnam Apartment Actual Transaction Price Index Turns Down After 4 Months Amid Tax Reform Proposals

The actual transaction price index for apartments in the Gangnam area of Seoul has turned downward for the first time in four months.

This decline is believed to be driven by the fallout from the government's push for tax reforms, which prompted quick-sale transactions for high-priced homes.

According to the apartment actual transaction price index statistics released by the Korea Real Estate Board on October 16, the actual transaction price index for apartments in southeastern Seoul (Gangnam, Seocho, Songpa, and Gangdong districts) fell 0.29 percent in August.

After dropping 2.62 percent in March and 1.32 percent in April due to a rush of selling ahead of the enforcement of heavy capital gains taxes on owners of multiple homes on May 9, the index had been on an upward trend starting in May before returning to a decline after four months.

Among the five regions in Seoul, the southeastern region was the only area where the actual transaction price index declined.

The actual transaction price index for Seoul as a whole in August maintained an increase of 0.72 percent, though the upward momentum slowed compared to the previous month's 1.83 percent.

Market insiders analyze that the decline in the southeastern region's index was largely influenced by the government's tax reform proposal unveiled on August 3, which foreshadowed tax hikes primarily targeting high-priced homes.

Market prices fell as quick-sale listings increased, centered around ultra-high-priced complexes in the Gangnam area, driven by factors such as the hike in the comprehensive real estate holding tax for high-end homes and the reduction of long-term holding special deduction benefits for capital gains tax.

In weekly trend surveys conducted by the Korea Real Estate Board, apartment prices in Gangnam and Seocho districts fell for 10 consecutive weeks from the survey date of August 10 through the current week.

Unlike the Gangnam area, the northeastern region—home to mid-to-low-priced apartments in areas such as Nowon, Dobong, and Gangbuk districts—recorded the highest increase, with its actual transaction price index rising 1.54 percent.

The central region, centered around Jongno and Jung districts, rose 1.06 percent.

Market experts view that given the recent decline in transaction volume and the expanding scale of loan interest rate hikes, the number of areas where the actual transaction price index growth slows down or turns downward is likely to increase.

According to the interim preliminary actual transaction price index for Seoul apartments in September compiled by the Korea Real Estate Board, the growth rate narrowed to 0.16 percent compared to August, with the central region projected to turn downward at -0.97 percent and the southeastern region expected to see its drop widen to -1.71 percent.

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.