[Teheran-ro] The Ball President Lee Has Set in Motion

The real estate market has been in turmoil recently. The main reason is the looming end, on May 9, of the temporary suspension of heavier capital gains taxes on owners of multiple homes. As President Lee Jae-myung personally and firmly confirmed that the suspension will end, debate over curbing housing prices has intensified not only in the property market but also in political circles.
It is considered unusual for President Lee to issue what amount to final warnings day after day through social media. Some even compare him to United States President Donald Trump, who used to announce major policies via social media. Precisely because this is an exceptional pattern, it is being read as a sign of how strongly President Lee is committed to ending the suspension.
Looking more closely at President Lee’s actions, it seems too simplistic to dismiss them as an obsession with bringing down housing prices. The end of the heavier capital gains tax suspension for multiple-home owners was already announced four years ago. What is happening now is simply that the temporary measure is expiring as scheduled; it is not, in itself, a brand-new policy to cool the housing market. Of course, one can expect that, as the suspension ends, more properties will come onto the market and prices may stabilize at a lower level.
Even so, the reason President Lee is stepping to the forefront and amplifying the issue appears to be his intention to underscore that the government will enhance the predictability of its policies and maintain consistency. In the real estate market, the most toxic factor is not regulation itself, but the expectation that “the rules might change.” President Lee’s aim is to break this vicious cycle of speculation driven by such expectations, using the straightforward approach of policy consistency.
At a Cabinet meeting on the 3rd, when Koo Yun-cheol, Deputy Prime Minister and Minister of Finance and Economy, was reporting related measures and used the phrase “probably,” President Lee cut in and said, "From now on, there is no such word as 'probably.'" This reflects his long-held belief that once a government policy is decided, it must be carried out consistently if public trust in that policy is to grow.
According to Lim Gwang-hyun, Commissioner of the National Tax Service, the number of housing sales by multiple-home owners in areas subject to tightened regulations rose sharply around the time the heavier capital gains tax rules took effect in 2021. Transactions increased from 39,000 in 2019 to 71,000 at the time the measure was announced in 2020, and then to 115,000 when it was implemented in 2021. However, when the heavier tax was temporarily suspended in 2022, those who had trusted the original policy could not help but feel deflated. To borrow President Lee’s own words, "Those who did not believe the government gained, while those who believed it lost." This was the result of ad hoc, stopgap prescriptions tailored to the preferences of the administration in power. What deserves attention now is not the dispute over housing-price controls, but the clear signal that "the government keeps its promises." One can only hope that the signals President Lee continues to send will become a turning point for building public trust through consistent policy.
syj@fnnews.com Reporter