Kim Yun-duk Vows to Make Home Ownership Less Profitable, Signals Comprehensive Policy Package

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According to The Financial News, Kim Yun-duk, Minister of Land, Infrastructure and Transport of South Korea, said on the 12th, "I will make it clear that simply owning a home will no longer be significantly advantageous in economic terms," and revealed that the government is preparing a comprehensive real estate package that will encompass taxation, finance, and liquidity management.On the housing market, he noted, "Listings are increasing and the pace of home price growth has narrowed considerably," adding, "Above all, the fact that expectations for further price increases have fallen sharply is a very important change."■ Kim: "Expectations of rising home prices have fallen sharply"
Appearing on CBS Radio's "Park Sung-tae's News Show," Kim Yun-duk discussed recent developments in the real estate market and remarked, "In the past, prices kept rising even though few properties were put up for sale, but now the number of listings is increasing."
He went on, "What matters most is that, overall, the rate of home price increases has shrunk significantly."
He placed particular emphasis on the shift in market sentiment.
Kim said, "Sentiment is crucial in the real estate market, and I attach great importance to the fact that expectations of rising home prices have dropped sharply," explaining, "This time, many people genuinely believe prices may fall, and there is a growing public perception and market sentiment that if they had invested that money in stocks instead, their assets might have grown more."On the direction of government policy, he stated, "Our aim is to create a structure in which owning housing does not yield economic gains," and continued, "We are preparing strong government measures to address speculative holdings and the so‐called strategy of concentrating on one prime property, so that there is no reason to own a home you do not live in."Regarding the outlook for the market after the end of the suspension of heavy capital gains tax on multiple-home owners, he commented, "It is never easy to predict the market in advance, but the core of the suspension of heavy capital gains tax on multiple-home owners lies in tax justice and fairness for the public," stressing, "Policy will proceed based on consistent principles."
On specific measures related to tax policy, he said, "The Ministry of Land, Infrastructure and Transport is not the ministry in charge of taxation, so it is difficult for me to go into detail," but added, "Policy will be pursued in a way that ordinary people can reasonably accept, under the principle that simply holding on to a home is by no means economically beneficial."
■ Reviewing a comprehensive package on taxation, finance, and supply
The government is working on a real estate stabilization package that brings together tax and financial policy.
Kim said, "We need to craft tax adjustments and financial measures together," adding, "Managing liquidity is extremely important, and we must also consider monetary policy in tandem." On tax schemes such as the long-term holding special deduction, he pointed out, "In many cases, home prices have risen sharply, and when you compare that with the taxes paid by salaried workers, the situation is practically indefensible," and declared, "We need to overhaul the tax system as a whole." Addressing concerns that stronger property holding taxes could be passed on to tenants, he explained, "The basic benchmark for setting Jeonse prices is ultimately the home price," and continued, "Jeonse cannot rise more than home prices, so establishing a downward stabilization trend in real estate prices is fundamentally beneficial for people without homes." On the appropriate level of housing prices, Kim commented, "It is hard to specify a concrete price level, but as a basic stance, I believe prices need to fall further and continue moving downward," adding, "I see the proper level as the price that prevails when real estate is not treated as a vehicle for speculation or short-term investment." He acknowledged that housing supply has been insufficient to some extent. Kim said, "For about three years under the previous administration, preparations for housing supply were not properly made," and continued, "We plan to rapidly convert general commercial buildings into housing for quick supply, and to adopt a model of premium studio apartments for single-person households to boost supply in the very short term." He added, "We will also push ahead quickly with the supply of housing in the Third New Towns, and move at speed to provide homes by utilizing idle sites in urban areas."
en1302@fnnews.com Jang In-seo Reporter