Mid- and low-priced transactions rise after Aug. 3 tax reform plan

Deals under 600 million won surge as policy loans remain available

Transactions above 900 million won continue to decline

Buyers hold off on Gangnam luxury bargains for now

Apartment complexes in the Gangnam and Seocho-gu area as seen from Namsan Park in Jung-gu, Seoul. [Herald DB]
Apartment complexes in the Gangnam and Seocho-gu area as seen from Namsan Park in Jung-gu, Seoul. [Herald DB]

Eight out of every 10 Seoul apartment transactions completed after the government unveiled its Aug. 3 tax reform plan involved units priced at 1.5 billion won ($1.1 million) or less, data show. While ultra-high-end apartments in Gangnam have seen sluggish sales, buyers have flocked to lower-priced units — particularly those under 600 million won, which qualify for low-interest government policy loans including first-time homebuyer financing.

According to actual transaction price data filed with the Ministry of Land, Infrastructure and Transport's real estate transaction system, apartments contracted in Seoul since August — when the Aug. 3 tax reform plan was announced — showed that deals at or below 1.5 billion won accounted for roughly 79 percent of all transactions, excluding canceled contracts and purchases by public institutions.

That share had averaged 73.3 percent in the 10 months before the Oct. 15 measures last year (December 2024 through September 2025), then rose to 76.8 percent over the following 10 months through July this year.

The shift reflects tightened mortgage lending caps: borrowers buying homes priced at or below 1.5 billion won can borrow up to 600 million won, those buying units between 1.5 billion and 2.5 billion won are capped at 400 million won, and buyers of properties above 2.5 billion won can borrow no more than 200 million won. The relatively generous loan limit for sub-1.5-billion-won properties has concentrated buying demand in that segment.

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

Demand for mid- and low-priced apartments has held up even after the Aug. 3 tax reform plan, which centers on higher taxes for ultra-expensive homes. A shortage of affordable jeonse and monthly-rent listings in Gangbuk and other areas appears to have pushed more renters toward buying.

Transactions at or below 600 million won made up 25 percent of all deals — roughly four in 10 — after the reform plan was announced, up sharply from 17.0 percent before the Oct. 15 measures and 20.5 percent in the period from those measures through July this year. Analysts attribute the jump largely to the availability of low-interest government policy loans, including first-time homebuyer financing, for properties in that price range.

Even within the sub-1.5-billion-won bracket, however, trends diverged by price tier. Deals under 600 million won and those between 600 million and 900 million won both rose consistently, while the 900 million-to-1.5-billion-won segment slipped from 33.1 percent to 30.4 percent around the Oct. 15 measures and fell further to 26.3 percent from August onward. In short, only apartments priced below 900 million won saw transaction growth.

The share of deals in the 1.5-billion-to-2.5-billion-won range — where buyers can borrow up to 400 million won — shrank from 18.4 percent before the Oct. 15 measures to 16.0 percent afterward, and contracted further to 15.3 percent from August.

Transactions involving apartments above 2.5 billion won — the primary target of the tax reform plan — fell from 8.3 percent to 7.2 percent and then to 5.8 percent. Distressed listings priced 1 billion to 2 billion won or more below their previous peaks have been growing in number, but uncertainty over the tax reform plan and concerns about holding-period taxes have kept most potential buyers on the sidelines.

Transaction volumes are also weighing on prices. According to the Korea Real Estate Board, Gangnam and Seocho-gu have posted eight consecutive weeks of price declines since the tax reform plan was announced, while non-Gangnam areas including Gangbuk have continued to rise.


soho0902@heraldcorp.com