The median price of apartments in Seoul surpassed the 900 million won ($760,000) threshold in January for the first time, according to commercial bank KB Kookmin Bank on Thursday.
The bank’s monthly report on real estate prices showed that the median price of Seoul apartments reached 912.2 million won as of this month, a record high since comparable data started to be compiled in December 2008.
A housing unit with a market value of 900 million won or more, categorized as an “expensive home,” is subject to strict mortgage and tax rules.
Those who buy apartments worth between 900 million and 1.5 billion won are levied with an acquisition tax of 3.3 percent, higher than the 1.01-2.99 percent charged for a home in the 600 to 900 million won bracket.
When one buys a home that costs more than 900 million won, a loan-to-value ratio of 40 percent is applied to the first 900 million won, while the LTV ratio drops to 20 percent for the difference beyond that amount. Mortgage loans are banned for apartments worth more than 1.5 billion won, classified as “super expensive homes.”
The data showed a steep rise in apartment prices after President Moon Jae-in took office in 2017. The median price at the time of Moon’s inauguration, May 2017, stood at 606.3 million won. The figure rose 50 percent in less than three years, despite the 18 sets of regulations the government has introduced so far.
Since the announcement of the latest regulations on Dec. 16 last year, apartments valued under 900 million won have enjoyed relatively stronger market demand, while the upward trend for super-expensive homes seems to have lost traction, according to market observers.
Classification standards for expensive homes in local tax law have been intact for more than a decade, they said, suggesting the need for a change. In 2008, the Lee Myung-bak administration changed the price standard that differentiates expensive homes from average homes, raising it to 900 million won from 600 million won.
“The median price has nearly doubled in the past decade, but the government’s standards for expensive homes have not changed a bit,” said an official in the local real estate market. “The government may have to reflect the reality in the housing market by increasing the price standard.”
By Kim Young-won (firstname.lastname@example.org