Seoul apartment land-transaction permit applications hit post-citywide-designation low in August

The number of land-transaction permit applications for Seoul apartments fell into the 3,000-case range last month, marking the lowest monthly total since the citywide land-transaction permit zone designation took effect. Even as transaction activity continued to contract, the prices cited in permit applications kept rising, led by the northern Seoul districts and the Han River belt.

The Seoul Metropolitan Government said Monday that 3,012 new land-transaction permit applications were filed for Seoul apartments in August — the lowest monthly figure since the city designated all of Seoul as a land-transaction permit zone in October last year.

The August tally was down 1,606 cases, or 34.8 percent, from 4,618 in July. Compared with the year's peak of 8,896 in April, applications fell by 5,884 cases, or 66.1 percent. After peaking in April, monthly applications declined for four consecutive months: 6,011 in May, 5,277 in June, 4,618 in July and 3,012 in August.

Since the citywide land-transaction permit system took effect in October last year through the end of August this year, cumulative applications totaled 55,990, of which 54,670, or 97.6 percent, have been processed.

Analysts attributed the drop in applications to a combination of factors: the expiration of the capital-gains tax surcharge deferral for multi-home owners, rising financing costs following benchmark interest rate increases in July and August, and continued lending restrictions. The Aug. 3 tax reform package has yet to complete final legislative steps, including National Assembly review, deepening a wait-and-see mood among prospective buyers and further dampening transactions.

Since May, the government has been progressively expanding the scope of owner-occupancy requirement waivers for homes with existing tenants, aiming to bring more listings to market and stimulate transactions. With applications continuing to fall, however, the transaction-boosting effect has so far fallen short of initial expectations. Owner-occupancy waiver requests in August totaled 135 cases, accounting for 4.5 percent of all applications — unchanged from the previous month's share.

Applications declined across all districts. The seven Han River belt districts dropped 38.6 percent, from 1,023 cases in July to 628 in August, and the four southwestern Seoul districts fell by the same margin, from 913 to 561. The three Gangnam districts and Yongsan-gu declined 34.6 percent, while the 10 northern Seoul districts fell 31.4 percent.

Northern Seoul's share of total applications rose to 48.8 percent from 46.4 percent the previous month, a gain of 2.4 percentage points. The Seoul Metropolitan Government said the northern districts did not see an increase in absolute terms, but their decline was smaller than in other areas, reflecting continued end-user demand in relatively more affordable neighborhoods.

Even as transaction applications fell, prices continued to rise in some areas. The city-wide average price cited in Seoul apartment land-transaction permit applications rose 0.17 percent from the previous month in August, a sharp slowdown from the 1.41 percent gain recorded in July.

By district group, the 10 northern Seoul districts rose 0.61 percent and the seven Han River belt districts gained 0.52 percent. In contrast, the three Gangnam districts and Yongsan-gu fell 0.34 percent, and the four southwestern districts dropped 0.99 percent. The Seoul Metropolitan Government said the decline in the Gangnam districts and Yongsan-gu reflected price corrections in some high-end homes amid concerns over a heavier tax burden, while the southwestern districts were weighed down by the strain of recent short-term price gains.

The price-change rate for land-transaction permit applications published by the Seoul Metropolitan Government is calculated using Bayesian estimation applied to the declared transaction prices in permit applications filed during the month. It may differ from the Korea Real Estate Board's actual transaction price index, which is based on contract dates recorded in transaction reports.