On 1 September, South Korea’s cabinet approved a property tax package that is milder than the one announced a month earlier. On 3 September, Seoul reported its lowest monthly transaction figure of 2026. Both facts are about the same tax reform, and they run in opposite directions — which is the most useful thing to look at right now.
The approved package moves in the owner’s favour on two specific levers. The cap on how far a holding tax bill can rise in one year returns to the current 150 percent, down from the 200 percent that had been proposed. And the basic deduction under the comprehensive real estate holding tax for a single-home owner who does not live in the property rises from 900 million won to 1.2 billion won.
The ruling Democratic Party wants more than that. Its housing market stabilisation task force sent the government a further set of measures: lift that deduction to 1.4 billion won, the same as for owner-occupiers; delay the 2029 abolition of the holding-period component of the long-term ownership special deduction; recalculate the deduction thresholds every three years against official assessed prices and inflation; and keep the fair market value ratio at 60 percent rather than raising it to 70 percent as the government intends. Most of these were left out of the cabinet-approved bill. The party says it will pursue them again during parliamentary review, while the government holds to a “residence-centred” framing — finance minister nominee Lee Hyung-il has said he will submit the bill as drafted.
The market’s answer was to stop transacting
Land transaction permit filings across Seoul’s 25 districts totalled 3,538 in August. That is 35 percent below July’s 5,438, which had itself been the year’s low, and roughly 65 percent below the April peak of 10,165. April was inflated for a reason: distressed listings flooded the market before a grace period expired on heavier capital gains taxes for multiple-home owners. Filings fell into the 6,000s in May and June, then broke below 4,000 after the 3 August tax announcement.
The decline is not spread evenly, and the pattern is the analysis. Comparing August with the April peak, Seongdong fell 78.8 percent, Gangnam 78.6 percent, Seocho 77.9 percent and Songpa 75.5 percent; the three Gangnam districts together went from 1,607 filings to 368, a drop of 77.1 percent. Dobong fell 39.9 percent and Geumcheon 38.5 percent — roughly half the Gangnam-area decline. The districts that froze hardest are the ones with the highest concentration of expensive homes, where lending limits bind first.
Why easing and freezing can happen at the same time
Listings went the other way. Seoul apartment listings rose from 60,409 on 3 August, the day the tax overhaul was announced, to 67,382 on 1 September — about 7,000 units, or 11.5 percent, according to the data platform Asil. That is a change from June and July, when listings stalled in the low 60,000s even as transactions contracted. Sellers are responding to the tax package; buyers are not. A tax measure can move the intention to sell without moving anyone’s ability to buy, and the two sides of a transaction are being acted on by different forces.
The second force is rates, and it is not part of the tax debate at all. The Bank of Korea’s Monetary Policy Board raised the base rate by 0.25 percentage point in July and again in August, taking it from 2.50 percent to 3.00 percent. Districts full of mid- and lower-priced homes lean more heavily on borrowing, which is why the outer districts fell too, just less steeply. On the ground, brokers describe a chain that will not move: an agent in Gangnam’s Gaepo-dong said sellers had cut 200 million to 300 million won off asking prices with no takers, because “loans aren’t available, so who is going to have 3 billion to 4 billion won in cash”; an agent in Seongdong’s Oksu-dong said owners who want to trade up cannot sell their own homes first, blocking transactions down the chain.
The third factor is the one the data cannot resolve. The tax package is not finished — it still has to survive parliamentary review, with the ruling party pushing for looser terms than the government drafted. Unsettled rules are their own deterrent, separate from whether the final rates are high or low, because neither buyer nor seller can price what has not been decided. That is why the current filings figure does not tell you whether easing will thaw the market: the easing has not finished being written.
Zagdim’s View — Read the two numbers as answers to different questions. The tax package tells you the direction the government is willing to be pushed. The filings figure tells you what happens while the rules are still being written, and it says the freeze is concentrated exactly where lending limits bite. Anyone tracking Seoul as a market will learn more from the next parliamentary round than from another month of transaction data.
References
JKN – Democratic Party Pushes for Additional Real Estate Tax Breaks / Seoul Economic Daily – Seoul Home Sales Freeze Deepens as Gangnam Filings Plunge 77%
