Gangnam distressed sales draw buyers from Gyeonggi Province as tax reform bites

Distressed listings surge in Gangnam as buyers trade up from Gyeonggi Province; one Olimpark Foreon unit listed at 1.55 billion won

Property listings posted at a real estate agency in Gangnam-gu, Seoul. [Yonhap]

As the government's Aug. 3 tax reform package tightens the burden on high-priced homes, a wave of distressed listings has flooded the Gangnam real estate market — and buyers are seizing the moment to trade up to more sought-after addresses. Wealthy investors are also treating the combination of rising supply and falling prices as an opportunity to build assets.

Gyeonggi Province residents snap up Banpo reconstruction apartments

According to the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system, a 79-square-meter unit at Sinbanpo 2-cha apartment in Jamwon-dong, Seocho-gu changed hands on Sept. 5 for 4.15 billion won ($3.05 million), on the ninth floor. That is 600 million won below the record high of 4.75 billion won set in February for an eighth-floor unit.

Court registry records show the buyers were persons A and B, residents of Ilsanseo-gu, Goyang, Gyeonggi Province. No mortgage was registered on the property, suggesting the purchase was made entirely in cash. Given that Seoul's designation of the entire city as a land transaction permit zone imposes an owner-occupancy requirement, the transaction is widely seen as a trade-up move in which the buyers sold their previous home and relocated to Banpo.

Property listings posted at a real estate agency in Gangnam-gu. [Yonhap]

Similar cases have emerged elsewhere. An 84-square-meter unit at Banpo Mido 1-cha apartment in Banpo-dong, Seocho-gu sold last month for 4.02 billion won on the 12th floor — more than 150 million won below the previous record of 4.18 billion won set in November last year on the same floor.

The buyer was a resident of Woncheon-dong, Yeongtong-gu, Suwon, believed to have financed the distressed purchase through proceeds from selling a previous home, a partial loan and cash on hand.

Wealthy buyers have also been spotted picking up bargains outright. A 112-square-meter unit at Bangbae Grand Xai in Bangbae-dong, Seocho-gu was purchased entirely in cash by a buyer born in the 1990s who lives at Raemian One Bailey in Banpo-dong. The deal closed at 3.85 billion won — 150 million won below the record high of 4 billion won set in October last year.

A wealth management consultant at a major bank said investor sentiment had long been dampened by rising interest rates, but added that buyers looking to trade up by targeting distressed listings in the three Gangnam districts — Gangnam-gu, Seocho-gu and Songpa-gu — or seeking to buy homes for their children continued to appear consistently.

'Distressed Olimpark Foreon unit for sale' — listings keep coming

Behind this wave of trade-up activity lies a straightforward dynamic: the government's finalized tax reform has raised the holding cost on high-priced properties, pushing owners to list at discounted prices.

Under the 2026 tax reform package, the government raised the fair market value ratio used to calculate the comprehensive real estate tax, concentrating the heavier burden on ultra-high-priced homes valued above roughly 3.5 billion to 4 billion won. It also overhauled the long-term holding special deduction system to factor in actual residency periods, tightening deduction eligibility for multi-home owners and non-resident properties.

As a result, distressed listings in the Gangnam area have been coming mainly from elderly owners with limited cash flow and multi-home owners feeling the weight of capital gains tax. On Saturday, a post appeared on a popular online real estate community offering a 39-square-meter unit at Olimpark Foreon in Dunchon-dong, Gangdong-gu for 1.55 billion won, asking interested buyers to make contact. That unit type set a record high of 1.8 billion won in May, meaning the asking price represents a drop of more than 250 million won.

A real estate agency in Songpa-gu, Seoul. [Yonhap]

The number of homes listed for sale in Seoul has been climbing since the government announced the reform targeting ultra-high-priced and non-resident properties. As of Friday, 72,387 units were listed for sale in Seoul, up 11,978 — or 19.8 percent — from 60,409 on Aug. 3, the day the reform was announced, in roughly seven weeks.

The surge was particularly pronounced in the three Gangnam districts, where high-priced apartments are concentrated. Listings in those three districts rose by 5,701 units, or 25.7 percent, over the same period, accounting for 47.6 percent of Seoul's total increase.

By district, listings in Gangnam-gu rose 24.4 percent, while Seocho-gu and Songpa-gu climbed 27.3 percent and 25.5 percent, respectively — all outpacing Seoul's overall increase of 19.8 percent.

Experts caution, however, that the appearance of distressed listings does not necessarily signal a broad price decline. A local real estate agent warned against reading the word "distressed" as evidence that Gangnam home prices had collapsed by 1 billion won across the board in a short period. What is happening, the agent said, is less a uniform drop and more a process in which price adjustment pressure is intensifying first among ultra-high-priced homes and listings carrying a heavy tax burden.

hss@heraldcorp.com