28% of May Seoul Apartment Deals Exceeded 1.5 Billion Won

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an 'artificial intelligence (AI)-based customized news recommendation and summary service' developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.

1. High-End Apartment Sales Surged Ahead of Capital Gains Tax Increase

Key Summary: Around the time the heavier capital gains tax took effect, transactions of high-end Seoul apartments showed sharp shifts in trend. The share of transactions exceeding 1.5 billion won fell from 21.1% in January to 16.6% in March, then rebounded to 24.2% in April and 27.9% in May, marking the highest level of the year. Ultra-high-end transactions exceeding 3 billion won also soared from 156 in March to 514 in May, and their share more than doubled from 2.84% to 5.9%. From June, after the heavier tax took effect, the structure shifted to a decline in high-end home transactions amid a wait-and-see stance ahead of tax reform, with an increase in mid- to low-priced sales.

2. Top 5% Seoul Home Price Growth Ranks 2nd Worldwide After Tokyo

Key Summary: The nationwide housing price growth rate rose only 1.2-fold in real terms in 2024 compared with 2000, falling below the OECD average (1.6-fold). However, in the Knight Frank PGCI report, the top 5% of Seoul homes rose 25.2% as of the third quarter of last year, ranking second among 46 cities. This growth exceeded 10 times the average of the 46 major cities (2.5%) over the same period, confirming that it was concentrated in specific areas such as the three Gangnam districts and the Han River belt. The National Assembly Futures Institute pointed out that price polarization between high-end and ordinary homes is becoming severe.

3. Authorities to Ease Balance-Payment Loans Only for New Presales

Key Summary: The core of the household loan measures the FSC will announce as early as mid-month is support for balance-payment loans for those scheduled to move into new apartments. The authorities' policy is that those scheduled to move in who subscribed before last year's '6·27 regulations' and buyers who purchased existing apartments after the regulations cannot be viewed on the same footing. Easing of the LTV ratio for actual-demand buyers is highly likely to be excluded over concerns that it could fuel housing price increases. A plan to expand the scale of public project financing (PF) guarantees for non-apartment projects, as part of expanding supplier financing, is also under review.

4. Cost Ratios Improve Despite Fewer Groundbreakings… Operating Profit Up 53%

Key Summary: In the second quarter of this year, revenue at six major construction firms was 18.0967 trillion won, down 6.5% from the same period a year earlier, but operating profit surged 52.9% from 576.3 billion won to 881.3 billion won. Samsung C&T saw revenue and operating profit grow 17.5% and 71.2% respectively on the back of strong semiconductor construction, while Hyundai Engineering & Construction saw new orders soar 158.2%, with its order backlog surpassing 100 trillion won for the first time since its founding. However, with raw material prices rising again amid the prolonged Iran war and overlapping with the interest rate hike cycle, the performance gap between construction firms is expected to widen further in the second half depending on their ability to secure semiconductor and overseas orders.

5. "Let's Clear 23 Trillion Won in Bad Loans"… Regional Nonghyup Allowed Self-Investment in NPL Funds

Key Summary: As Nonghyup mutual finance's substandard-and-below loans surged 5.5-fold from 4.1717 trillion won at the end of 2021 to 22.9718 trillion won this June, the government has moved to revise regulations toward allowing self-investment in NPL funds. The core of the bad loans is joint loans secured by commercial facilities, with the delinquency rate soaring from 1.31% at the end of 2021 to 27.98% this June, and the delinquent balance ballooning more than 26-fold from 55.8 billion won to 1.4842 trillion won. The analysis attributes this to a plunge in collateral values, as a surge in joint loans for income-generating real estate during the low interest rate period was compounded by rising interest rates, a domestic demand slump, and the spread of retail vacancies driven by the expansion of online consumption.

6. Cho Sang-ho: "Focusing on Completing the Administrative Capital… Achieving a Self-Sufficient Economy Through Three Innovation Clusters"

Key Summary: Sejong Mayor Cho Sang-ho put forward the enactment of an 'Administrative Capital Special Act' as the top priority of his fifth popularly elected term, and unveiled a vision to build a self-sufficient economic foundation by creating three innovation clusters linking the smart national industrial complex, the Jiphyeon-dong Tech Valley, and the digital media complex. Efforts to attract businesses also appear to be gaining speed, with Samsung Electro-Mechanics announcing a plan to invest 8 trillion won in production facilities. Strengthening administrative capital functions combined with the policy direction of balanced national development is serving as a backdrop for growing mid- to long-term interest in Sejong's real estate market.