Seoul apartment transactions declined sharply from May through July as homeowners adopted a wait-and-see stance ahead of an imminent government property tax reform announcement. According to the Ministry of Land, Infrastructure and Transport's transaction disclosure system, Seoul apartment sales dropped from 9,090 cases in May to 5,085 cases in June and 2,634 cases in July. The slowdown concentrated in high-value property areas as the government reviews comprehensive real estate measures including supply, financing, and tax reforms. The government is examining strengthening the comprehensive property tax basic deduction and subdividing tax brackets or raising rates for ultra-high-value properties above a certain threshold. South Korea's property tax reform aims to address imbalances where multi-home owners of low-value properties pay more tax than single-home owners of high-value properties by shifting the tax system from home quantity to home value.
Seoul Apartment Transactions Drop from May to July
Seoul apartment sales totaled 2,634 cases in July, down from 5,085 cases in June and 9,090 cases in May, according to Ministry of Land, Infrastructure and Transport data. Of the July transactions, 2,235 cases involved properties priced below 1.5 billion won, while only 68 cases exceeded 3 billion won.
Government Reviews Comprehensive Property Tax Reforms
The government is reviewing comprehensive real estate measures covering supply, financing, and tax policies. Under consideration are plans to strengthen the comprehensive property tax basic deduction, subdivide tax brackets for properties above ultra-high-value thresholds, and raise tax rates in those brackets. Authorities are also examining shifting the tax system from a home-quantity basis to a home-value basis to correct imbalances where multi-home owners of low-value properties pay more than single-home owners of high-value properties.
High-Value Districts Show Wait-and-See Sentiment
A tax accountant operating in Mapo District stated, "There were many consultations until mid-July, but as the tax reform announcement became imminent, customers postponed scheduled consultation appointments to after August." A realtor in Gangnam District said, "Because tax reform will be announced, the wait-and-see sentiment is clear on the ground and transactions are in a lull. For elderly people without income, the tax burden cannot be ignored, so after property tax strengthening, there will be concerns about holding properties." A realtor in Yangcheon District noted, "It's the off-season due to vacations, and many people want to see the tax reform details before making decisions. Even if an ultra-high-value bracket is created, Mokdong has mostly union members with long holding periods, so it's not a situation where listings will increase by lowering prices."
Policy Debate Proposes Single Owner-Occupied Home Tax Maintenance
At a real estate policy debate chaired by Prime Minister Han Duck-soo, Professor Kang Seong-hoon of Hanyang University's Policy Studies Department proposed maintaining the current tax level for owner-occupied single homes. Kang stated, "For non-residential single-home owners, convert the tax deduction from ownership-based to residence-based, and for multi-home owners, adjust the basic deduction, fair market value ratio, and tax rates. Let's ease the payment deferral requirements for elderly single-home owners."
FAQ
How much did Seoul apartment transactions decline from May to July?
Seoul apartment transactions fell from 9,090 cases in May to 5,085 cases in June and 2,634 cases in July, representing a 71% decline from May to July according to Ministry of Land, Infrastructure and Transport data.
What property tax reforms is the South Korean government considering?
The government is reviewing strengthening the comprehensive property tax basic deduction, subdividing tax brackets or raising rates for ultra-high-value properties, and shifting the tax system from home quantity to home value to address imbalances between multi-home and single-home owners.
What did Professor Kang Seong-hoon propose at the policy debate?
Professor Kang Seong-hoon proposed maintaining current tax levels for owner-occupied single homes, converting non-residential single-home deductions from ownership-based to residence-based, adjusting basic deductions and tax rates for multi-home owners, and easing payment deferral requirements for elderly single-home owners.
