Seoul apartment land-transaction permit applications fall nearly 40% from peak, but asking prices post steepest monthly gain since Oct. 15 measures

Land-transaction permit applications for Seoul apartments last month fell nearly 40 percent from the April peak, even as the rate of increase in application prices hit its highest level since the Oct. 15 real estate measures took effect.

The Seoul Metropolitan Government said Friday that new land-transaction permit applications for Seoul apartments totaled 5,382 in June — down 39.7 percent from the April peak of 8,925 and 10.9 percent below the May figure of 6,043.

The city releases monthly data on land-transaction permit applications and price movements across all 25 autonomous districts to reduce information gaps in the real estate market during the period before housing contracts are finalized.

Since the citywide land-transaction permit regime took effect in October last year, cumulative applications through the end of June totaled 48,564. Of those, 46,454 have been processed, a completion rate of 95.7 percent.

In May, applications fell 32.3 percent from the previous month as the temporary suspension of the capital gains tax surcharge on multi-home owners came to an end. Although the owner-occupancy requirement exemption for tenant-occupied homes took effect May 29, applications continued to decline in June, and the city said the policy has yet to produce a clear uptick in transactions.

The daily average number of land-transaction permit applications in June also fell back to levels seen before the multi-home capital gains tax surcharge suspension was announced. The city attributed the decline to a drop-off in applications that had temporarily surged ahead of the surcharge suspension's expiration, compounded by a wait-and-see mood among market participants holding off on transactions ahead of tax reform changes expected in July.

By zone, the share of applications from the three Gangnam districts and Yongsan-gu declined while the proportion from northern Seoul grew. The combined share of the three Gangnam districts and Yongsan-gu fell from 16.7 percent in May to 13.0 percent in June, while the 10 districts in northern Seoul saw their share expand from 41.5 percent to 46.2 percent over the same period.

The city said the shift reflects a drop in tax-motivated transactions in the Gangnam area following the end of the capital gains surcharge suspension, with activity moving toward northern Seoul and outer districts where end-user demand is stronger and loan burdens are relatively lighter.

The seven Han River belt districts saw their share edge down from 23.9 percent to 22.3 percent, while the four southwestern districts held steady at 18.5 percent, roughly unchanged from May.

Applications filed under the owner-occupancy requirement exemption for tenant-occupied homes — a measure that took effect last month — totaled 279, accounting for 5.2 percent of all land-transaction permit applications.

The government had earlier revised the system after equity concerns arose over the exemption applying only to multi-home owners, expanding it to allow single-home owners to sell properties with sitting tenants. Since May 29, the owner-occupancy requirement exemption within land-transaction permit zones has covered all homes with tenants in residence.

By zone, the 10 northern Seoul districts recorded the highest number of such applications at 115, followed by the seven Han River belt districts at 72, the three Gangnam districts and Yongsan-gu at 65, and the four southwestern districts at 27.

As a share of total permit applications, the three Gangnam districts and Yongsan-gu posted the highest rate at 9.3 percent, followed by the Han River belt at 6.0 percent, northern Seoul at 4.6 percent, and the southwestern zone at 2.7 percent.

The city noted that these are the first figures compiled since the owner-occupancy exemption was expanded to cover all tenant-occupied homes. The 5.2 percent share is well below the 21.7 percent recorded during the multi-home capital gains surcharge suspension period.

Even as transaction applications declined, the rate of price increases accelerated. Asking prices across all land-transaction permit applications in Seoul rose 2.67 percent from the previous month — up from May's 1.87 percent gain and the highest monthly increase since the Oct. 15 measures designated the entire city as a land-transaction permit zone.

The city said the price rise reflects the absorption of most distressed listings that came to market ahead of the capital gains surcharge suspension's expiration, with regular transactions at prevailing asking prices becoming more common once the rush of discounted sales wound down. Sustained end-user buying demand was also cited as a contributing factor.

By zone, the Gangnam area rebounded while non-Gangnam areas also strengthened. Asking prices in the three Gangnam districts and Yongsan-gu rose 3.10 percent from the previous month, with the city attributing the acceleration to a significant clearing of distressed listings following the resumption of the capital gains surcharge and a subsequent rise in regular transactions at existing asking-price levels.

The seven Han River belt districts posted a solid gain of 1.89 percent from the previous month. Northern Seoul's 10 districts rose 2.86 percent and the four southwestern districts gained 2.89 percent. The city said end-user buying concentrated in mid-to-lower-priced apartments has spread price gains across Seoul as a whole.