Seoul apartment listings have surged in the seven weeks since the South Korean government unveiled a tax reform proposal targeting ultra-high-priced and non-resident homes. Roughly half of the increase came from the Gangnam 3 Districts, where high-priced housing is concentrated, and Gangnam-gu recorded its steepest weekly price decline since December 2022—a span of 193 weeks. Homeowners worried about higher tax burdens are flooding the market with listings, while buyers remain on the sidelines, visibly chilling the high-end housing market.

According to Asil, a real estate big-data platform, Seoul apartment listings totaled 72,387 as of the 23rd. That is up 11,978 units, or 19.8%, from the 60,409 recorded on the 3rd of last month, when the government announced the tax reform proposal. It marks the highest listing volume in about five months, since April 30, just before the suspension of the heavy capital gains tax on multi-home owners expired.

Regional divergence is striking. Over the same period, listings in the Gangnam 3 Districts rose by 5,701 units, accounting for 47.6% of the total increase across Seoul. Gangnam-gu climbed 24.4%, while Seocho-gu and Songpa-gu rose 27.3% and 25.5%, respectively—all three outpacing the citywide growth rate.

Tax Reform Proposal Triggers Listing Surge

On the 3rd of last month, the government unveiled a tax reform proposal centered on changing the Comprehensive Real Estate Tax base from the number of homes owned to the total value of housing held. The move responded to criticism that the current system—which determines tax burden solely by the number of homes regardless of price—encourages a “one trophy home” strategy. The proposal also included a phased increase in the fair market value ratio and higher Comprehensive Real Estate Tax rates on expensive homes.

Analysts say the change to the Long-Term Holding Special Deduction for capital gains tax—shifting eligibility from a combined holding-and-residency basis to one centered on actual residence, with a cap of 1 billion won (approximately $740,000)—had an outsized impact on the market. As backlash grew over what critics called “punitive taxation” effectively targeting even single-home owners, the government on the 1st significantly revised the draft, keeping the basic deduction for non-resident single-home owners at the current 1.2 billion won (approximately $890,000) and restoring the tax burden ceiling to 150%. However, the higher Comprehensive Real Estate Tax rates on expensive homes and the weakened Long-Term Holding Special Deduction remain intact.

Buyer Demand Frozen

While listings pile up quickly, buying activity has been slow to recover. This trend is clearly visible in land transaction permit application figures. According to data from the Saeol e-Government portal, land transaction permit applications in the Gangnam 3 Districts plunged from a pre-reform weekly average of 143 to 67 in the first week of August, immediately after the announcement—less than half the prior level. Applications stayed below 100 throughout August before recovering to the 100s in September, but the third week of September saw 134 applications, still below pre-reform levels.

The pattern holds for Seoul as a whole. Land transaction permit applications, which averaged 1,288 per week over the nine weeks before the tax reform, fell 40.4% to 768 immediately after the announcement. They have since gradually recovered to the 1,100 range in September, but remain about 13% below the pre-reform average. Because apartment purchase contracts in land transaction permit zones require approval from the relevant local government before signing, these figures are interpreted as a leading indicator of buyer sentiment.

Gangnam Falls, Outer Districts Rise

The combination of rising listings and buyer hesitation has kept Gangnam-area prices on a downward trajectory. According to the Korea Real Estate Board’s weekly apartment price trends, Gangnam-gu fell 0.42% week-over-week in the third week of September—its steepest decline in 193 weeks, since the fourth week of December 2022. Seocho-gu also dropped 0.37%, its largest fall in 192 weeks, with both districts now down for seven consecutive weeks. Songpa-gu slipped 0.14%, marking a third straight weekly decline.

In contrast, relatively affordable outer districts of Seoul are still rising. In August, Seongbuk-gu posted the highest monthly gain among Seoul’s 25 autonomous districts at 1.83%. Nowon-gu followed at 1.77%, Seodaemun-gu at 1.64%, Jungnang-gu at 1.53%, and Jung-gu at 1.48%—all areas dense with mid-to-low-priced housing. The price trajectories of the high-end Gangnam area and the more affordable districts have clearly diverged.

Lee Eun-hyung, a research fellow at the Korea Construction Policy Institute, said, “Lending restrictions play a role, but transactions typically contract right after the government rolls out a major policy.” He added, “Even with some distressed sales emerging now, expectations that prices could fall further are keeping buyers—especially for high-priced homes with large transaction amounts—firmly on the sidelines.”

He continued, “However, as these listings get absorbed, the number of sellers who must sell urgently declines, which could actually work in favor of prices.” He explained, “When regulations are tightened on expensive homes, demand shifting to the tier below is a pattern that has repeatedly appeared.”

The tax reform proposal still faces National Assembly review, leaving room for further adjustments during the legislative process. While the basic direction of raising holding-tax burdens on expensive homes appears likely to remain, attention is focused on whether the backlog of Gangnam listings and price declines will persist in the near term.