Out-of-towner ownership share is triple the national average

Long-term deduction, comprehensive real estate tax credit eyed for 'actual residency' overhaul

Nearly half of the privately owned homes added in Seoul over the past eight years belong to people registered outside the city, new data show, raising questions about how much of the demand is driven by investment rather than actual residency.

According to the Ministry of Statistics' national statistics portal KOSIS, Seoul had 2,736,773 privately owned homes in 2024 — an increase of 201,166 units from 2,535,607 when records began in 2016.

Apartment buildings crowd the Seoul cityscape as seen from Namsan. [Yonhap]
Apartment buildings crowd the Seoul cityscape as seen from Namsan. [Yonhap]

The growth in privately owned homes reflects not only new housing supply but also factors such as the conversion of corporate or public-sector properties to private ownership and the inclusion of previously uncounted units. The Ministry of Statistics, however, says most of the increase stems from new supply. The statistics cover apartments, detached houses, and row and multi-family homes, but exclude quasi-residential properties such as officetels.

Of the roughly 201,000 privately owned homes added in Seoul since 2016, 91,617 units — or 45.5 percent — are owned by people whose resident registration is outside Seoul. When owners registered in a different district within Seoul from where their property is located are included — an additional 12,326 units — the share rises to 51.7 percent, surpassing half.

Resident registration does not always reflect where a person actually lives; some people transfer their registered address for work, study or their children's education without physically relocating. Even so, roughly half of the newly added privately owned homes in Seoul going to out-of-towners points to significant demand driven by ownership for purposes other than actual residency.

Seoul's out-of-towner ownership rate stands well above other regions. Nationally, privately owned homes grew by 2,536,308 units over the same period, but out-of-towners accounted for only 410,785 of those additions — just 16.2 percent. Busan, which had the second-highest out-of-towner rate, came in at 27.8 percent. Gyeonggi Province, which recorded the largest absolute increase in privately owned homes at 868,309 units, had an out-of-towner share of just 6.8 percent.

The out-of-towner ownership rate for Seoul's privately owned homes has risen every year, climbing from 14.7 percent in 2016 to 17.0 percent last year. When owners registered in a different district within Seoul are also counted, the combined share exceeded 30 percent for the first time last year.

As questions mount over whether a substantial portion of newly added privately owned homes in Seoul are being used as primary residences, attention is turning to real estate tax reform. The government is reviewing a broad overhaul of housing-related taxes — covering acquisition tax, holding tax and capital gains tax — in line with President Lee Jae-myung's emphasis on an "actual residency" principle of taxation.

One measure under discussion is reducing the holding-period component of the special long-term capital gains deduction, which currently allows owners of a single home with an actual transaction price exceeding 1.2 billion won ($777,000) to deduct up to 80 percent of gains based on how long they have owned and lived in the property.

The long-term holding tax credit under the comprehensive real estate tax — which allows owners of a single home with a publicly assessed value above 1.2 billion won to deduct up to 50 percent of their tax liability based on the length of ownership — is also on the list for reform.

The capital gains tax exemption for "win-win rental housing," a scheme set to expire at the end of this year, may also be revised. The program waives the two-year residency requirement for the capital gains tax exemption and the special long-term deduction for landlords who cap rent increases at 5 percent above the previous contract. Critics have long argued, however, that the scheme has strayed from its original intent and been exploited as a tax-reduction tool by multi-home owners and gap investors.


y2k@heraldcorp.com