Apartment complexes in central Seoul [Herald DB]
Apartment complexes in central Seoul [Herald DB]

Seoul apartment sale prices rose for the seventh consecutive week as the government is expected to unveil a tax reform package as early as the end of this month.

According to a weekly market price survey by Budongsan114 AI released Friday, Seoul apartment sale prices rose 0.16% in the fourth week of this month. Prices have climbed every week since the first week of June, when they fell 0.03%. Gyeonggi Province and Incheon also rose 0.18%, pushing the Greater Seoul area up 0.17% this week.

Outside the metropolitan area, the five major regional cities and other provincial areas posted a more modest gain of 0.02%. Among individual regions, Ulsan recorded the highest increase at 0.14%, followed by North Chungcheong Province at 0.08% and North Jeolla Province at 0.06%. Of the country's 17 cities and provinces, 11 posted gains, one was flat and five fell. Nationwide, apartment sale prices rose an average of 0.14%.

The monthly nationwide rate of change for July stood at 0.57%, marking three consecutive months of accelerating gains since April, when the rate was 0.49%.

Jeonse prices also rose. The Greater Seoul area, including Gyeonggi Province and Incheon, was up 0.16%, while the five major regional cities and other provincial areas gained 0.02% and 0.05%, respectively. Nationwide, jeonse prices rose in 14 regions, with Gangwon Province the only area to fall, slipping 0.01%. Ulsan and North Jeolla Province each rose 0.09%, among the stronger performers.

With both sale and jeonse prices rising in the Seoul apartment market, the government's forthcoming tax reform package is expected to include stronger property holding taxes and reduced tax benefits for "ttoltteolhan han chae" — the practice of concentrating wealth in a single high-value home. President Lee Jae-myung, who chaired a major public forum on real estate policy on Thursday, signaled that holding taxes would need to triple to reach "the level of a typical advanced country."

However, shifting the basis for holding tax assessment from the number of homes owned to property value would require further discussion on how to define the threshold for ultra-high-priced homes and how to set applicable tax rates. Additional key issues include how to distinguish between owner-occupied and non-owner-occupied homes for tax purposes and what adjustments to make to the official assessed value and the fair market value ratio.

As the real estate tax system comes under review, attention is turning to how policy changes could affect home prices going forward. "Tax reform is a far more drawn-out process than supply-side policies, which tend to be relatively straightforward in direction, or financial policies focused on supporting end-users," a Budongsan R114 official said. "Whether the perspectives discussed at the forum will actually be reflected in policy remains to be seen."


lucky@heraldcorp.com