"Let's Wait and See" Ahead of Tax Reform... Transactions in the Capital Region Plunge

The real estate market in the Capital Region has entered a pause ahead of the tax reform. Transaction volume is falling rapidly, but prices are not easing easily. Analysts say the market is increasingly taking a wait-and-see approach as it watches the policy direction.
According to the Actual Transaction Price Disclosure System of the Ministry of Land, Infrastructure and Transport on the 29th, Seoul recorded 3,128 apartment sale transactions in July as of that day. That is a sharp decline from 9,102 in May and 5,233 in June.
Transactions in Gyeonggi Province and Incheon have also slowed. As of the same date, July apartment sale transactions in Gyeonggi Province stood at 9,807, down from 16,905 in May and 16,863 in June. Incheon also logged 1,771 transactions in July, compared with 2,852 in May and 2,683 in June. However, real estate deals must be reported within 30 days of the contract date, so July's figures could rise further.
The slowdown is also being felt on the ground. Real estate agencies in major Seoul neighborhoods said transactions have fallen sharply as the summer off-season combines with buyers' caution ahead of the government's tax reform announcement.
A real estate agent in Noryangjin-dong, Dongjak District, said, "With loan regulations making it hard to secure funds, the market has effectively come to a halt ahead of the tax reform." The agent added, "Prices are unchanged, but if you look only at transaction volume, it is clearly a sluggish market."
A real estate agent in Bongcheon-dong, Gwanak District, said, "Most of the listings are either unsuitable for actual living or priced too high, and recently there have even been cases of sellers withdrawing properties." The agent added, "Rather than demand falling, it is closer to there simply being no listings worth showing buyers."
In particular, in the three Gangnam districts, where high-end apartments are concentrated, the share of urgent-sale listings has noticeably declined due to tax burdens, according to market sentiment. On top of that, buyers are not stepping in readily, which has further reduced transaction volume.
A real estate agent in Banpo-dong, Seocho District, said, "Buyer inquiries have dropped a lot recently." The agent added, "Not only sellers, but buyers as well seem to be waiting to move once the tax reform plan is released."
This trend is also reflected in land transaction permit cases. The decline has been especially pronounced in the three Gangnam districts. Gangnam District recorded 505 cases in May, 217 in June, and 161 from July 1 to 28. Seocho District also fell from 395 in May to 183 in June and just 120 from July 1 to 28.
The market expects the slowdown in transactions to continue for now. Experts say the flow of deals and listings could change depending on how strong the tax reform plan turns out to be.
Yang Ji-young, Expert Member at Shinhan Premier Pathfinder, said, "It is difficult to predict how much the property holding tax will be strengthened, but the degree of tightening will likely affect how many listings come onto the market." She added, "However, it will not be easy for listings to increase simply because the holding tax is strengthened."
[email protected] Choi A-young Reporter