Applications for land transaction permits on Seoul apartments fell for a fourth straight month in August, dropping to the lowest level since the entire city was designated a land transaction permit zone last year. Lending curbs, interest rate increases and uncertainty over a tax overhaul have combined to shrink buying demand quickly. Even so, prices kept rising in the northern districts and the Han River belt, where homes are relatively more affordable, widening the gap between neighborhoods in Seoul's housing market.
New applications for land transaction permits on Seoul apartments totaled 3,012 last month, down 34.8% from 4,618 in the previous month, the Seoul Metropolitan Government said on the 14th. That is the smallest monthly figure since apartments across the city were designated a land transaction permit zone in October last year, and more than 1,000 fewer than the 4,019 recorded in November last year.
Applications peaked at 8,896 in April and have declined for four consecutive months since, falling to 6,011 in May, 5,277 in June, 4,618 in July and 3,012 in August. That amounts to a 66.1% plunge from April in just four months. Daily average applications also fell 28.3%, to 150.6 last month from 209.9 in July.
The city government attributed the decline to a combination of factors: the end of a grace period on heavier capital gains taxes for multiple-home owners, higher funding costs following base rate increases in July and August, and lending restrictions. It also said buyers had grown more cautious as the Aug. 3 tax reform plan still faces legislative steps including parliamentary review.
A widening exemption from owner-occupancy requirements for homes with sitting tenants, which the government has been expanding to encourage listings and revive transactions, has yet to show a clear effect. Applications for the exemption numbered 135 last month, just 4.5% of all permit applications. That was down 34.8% from 207 in July, while the share of total applications was unchanged from the previous month.
The slowdown in transactions was seen across Seoul, but price trends diverged. Prices in permit applications across the city rose 0.17% from the previous month last month. While that was a sharp slowdown from July's 1.41% increase, gains continued in the northern districts and the Han River belt.
Application prices in the 10 districts north of the Han River rose 0.61% in a month, while seven districts in the Han River belt — Seongdong, Mapo, Gwangjin, Dongjak, Yangcheon, Yeongdeungpo and Gangdong — gained 0.52%. By contrast, the three Gangnam districts and Yongsan fell 0.34%, and four southwestern districts including Gangseo, Gwanak, Guro and Geumcheon dropped 0.99%.
Application volumes also pointed to demand shifting toward relatively more affordable areas. Applications in the northern districts fell 31.4% from the previous month to 1,471 last month, a smaller decline than in other parts of the city. As a result, the northern districts' share of total applications in Seoul rose 2.4 percentage points, to 48.8% last month from 46.4% in July. Applications in the Han River belt and the southwestern districts each fell 38.6% over the same period, while those in the three Gangnam districts and Yongsan dropped 34.6%.
The Seoul city government said the northern districts' larger share does not reflect an increase in transactions but rather continued demand from people buying homes to live in, concentrated in areas where prices are relatively lower. With transaction volumes falling quickly and price trends diverging by area, it said, Seoul's housing market is showing regional differentiation rather than a uniform correction.
