Gangnam apartments shed W1.1b as outer Seoul gains 400 million — the price gap regulation built

Seoul's apartment market is deepening its decoupling trend in the wake of the government's tax reform package. While prime Han River belt neighborhoods — including Gangnam — are seeing a wave of discounted listings from owners seeking to cut tax bills or lock in gains, outer districts where end-users concentrate are experiencing the opposite: asking prices climbing to unprecedented levels.

According to industry sources Thursday, distressed listings have been multiplying around ultra-high-end properties such as Hyundai Apartment in Gangnam-gu's Apgujeong-dong since the tax reform announcement. As of Thursday, a mid-floor unit of 107 square meters at Shinhyundae (Hyundai 9th, 11th and 12th phases) was listed at an asking price of 5.9 billion won ($4.17 million). That is cheaper than the 5.8 billion won a lower-floor unit of the same size fetched in June, and nearly 1.1 billion won below the all-time high of 6.97 billion won set by an eighth-floor unit in July last year.

The number of listings in Seoul's core areas is also rising. According to real estate platform Asil, Gangnam-gu had 10,213 listings as of Thursday, up 18.9 percent from 8,584 six months earlier. Songpa-gu and Seocho-gu posted similar increases over the same period — 18.6 percent (4,462 to 5,295 units) and 14.7 percent (7,201 to 8,263 units), respectively. That stands in sharp contrast to Jungnang-gu, which is dense with apartments priced below 1.5 billion won, where listings fell 37 percent from 1,947 to 1,227 units.

Meanwhile, the market for apartments in the 1.5 billion to 2 billion won range remains hot. An analysis of Seoul apartment transactions last month by real estate platform Zigbang found that units sold in the 1.5 billion to 2 billion won bracket had the highest share of record-high transaction prices at 48.7 percent — the largest proportion of any price tier.

The trend is accelerating in part because the second-half tax reform package raised the threshold for the comprehensive real estate holding tax from a publicly assessed value of 1.2 billion won to 1.4 billion won — equivalent to a market price of around 2 billion won.

According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system, an 84-square-meter unit on the 11th floor of Haengdang Seoul Forest Prugio in Seongdong-gu recently sold at a record 2 billion won — a gain of 300 million won in just six months. A unit of the same size at Sindang Prugio in Jung-gu also set a new high, changing hands at 1.68 billion won on July 24. Current asking prices for the same floor plan in that complex range from 1.65 billion won to 1.85 billion won.

Complexes priced between 900 million won and 1.2 billion won — where loan limits are more generous — are showing similar heat. In outer districts such as Seongbuk-gu, which leads Seoul in price appreciation this year, asking prices for units in the roughly 66-square-meter range favored by newlyweds remain elevated. At Dong-A Ekovill in Sangwolgok-dong, Seongbuk-gu — where units traded in the 500 million won range a year ago — a 59-square-meter unit set a new high of 875 million won on July 30, and the top asking price has since climbed to 950 million won. Seongbuk-gu's cumulative change in the sales price index, as measured by the Korea Real Estate Board through the first week of August, stands at 10.85 percent — more than five times Gangnam-gu's 2.04 percent gain.

Nam Hyeok-woo, a real estate researcher at Woori Bank, said the decoupling is real but cautioned against reading too much into it. "It is too early to say that owners of high-priced Gangnam properties have begun moving in earnest following the tax reform announcement," he said. "Factors that could dampen buying sentiment — including the possibility of interest rate hikes and share market volatility — still persist." He added that steady demand from end-users is expected to support the sub-1.5 billion won segment, but that areas where prices have risen sharply in a short period may see buyers adopt a wait-and-see stance. "There is a possibility that demand will shift downward toward areas where prices have risen less and remain more accessible," he said.