The stronger the expectation that home prices will rise, the less likely owners of multiple homes are to put properties up for sale, according to a new analysis.
A Financial Stability Report released by the Bank of Korea on Sept. 22 found that expectations of home price gains have a substantial effect on whether owners of multiple homes have any incentive to sell. The current government revived heavier capital gains taxes on such owners to push more homes onto the market, but the report suggests tax measures have limited effect when price expectations are high.
The BOK estimated that if apartment prices are expected to stabilize at gains of 1.1% over the next five years — based on nationwide apartment prices since 2025 — or 3.5% for apartments in the greater Seoul area, the share of multiple-home households with an incentive to sell during 2027, when the heavier capital gains tax is temporarily eased, would be 30.4% and 19.8%, respectively.
By contrast, if expected price gains rise to 8.2%, the recent rate of increase for Seoul apartments, the share of households with an incentive to sell falls to 8.9%.
From May 10, the government reinstated heavier capital gains taxes on owners of multiple homes in designated speculation-control zones, adding 20 percentage points to the base rate for those with two homes and 30 percentage points for those with three or more. The rules were eased again just three months later. Under a tax revision package announced last month, the surcharge rates will be temporarily lowered in 2027 and 2028 for homes held at least two years, and the reduced rates will be applied retroactively to sales taxed at the higher rates since May 10 of this year.
Meanwhile, since the Aug. 13 housing measures, expensive homes in areas such as Gangnam, which are most exposed to the tighter taxation, have seen more listings along with slower price gains or outright declines, while the relatively cheaper Gangbuk area north of the Han River has posted strong increases.
Six weeks after the announcement, Seoul apartment listings stood at 70,000 units, in line with the average of 70,000 following previous policy packages, while weekly prices rose 0.16%, slightly above the past average of 0.10%.
Household lending grew rapidly in the first half of this year, but the pace has slowed since August as financial institutions approached their overall lending caps. A BOK official said prices of mid- and low-priced homes on the outskirts of Seoul and in parts of Gyeonggi Province are still rising sharply and expectations of further gains remain high. The official added that with the household lending growth target raised to 3.0% from 1.5%, household debt growth centered on housing-related loans could pick up again.
