Seoul home prices, widening temperature gap between Gangbuk and Gangnam amid tax reform uncertainty

Seoul apartment prices have recently been widening their gains on a weekly basis, while the trends in northern and southern Seoul are diverging sharply. According to surveys by the Korea Real Estate Board and KB, sale prices and jeonse prices in Seoul and major areas of the metropolitan region have generally been on the rise, but by area there were clear differences depending on whether preferred complexes were available and whether bargain listings had come onto the market. Northern Seoul showed relatively strong gains, while some areas in southern Seoul saw correction moves as bargain listings emerged amid discussions of tax reform. In particular, uncertainty surrounding reforms related to the longterm holding special deduction and the comprehensive real estate tax is affecting market sentiment, and in prime areas, listings are being withdrawn again or transactions are taking place selectively. Southern Gyeonggi and some other metropolitan areas also continued to rise, centered on complexes with good transportation conditions and concentrated demand. However, jeonse demand is declining as mobility decreases under the influence of interest rates and loan conditions, and the rental market is not strongly supporting sale prices. The government and the ruling party are reexamining the real estate tax reform plan, so the market is likely to remain sensitive to related news for the time being.