Government to Curb Benefits of Homeownership...Property Tax Reform for Ultra-High-Priced and Non-Owner-Occupied Single Homes

The government has officially confirmed plans to strengthen property holding taxes on owners of ultra-high-priced homes and non-owner-occupied single homes. Officials stressed that simply owning a house should no longer be economically advantageous. Kim Yun-duk, Minister of Land, Infrastructure and Transport of South Korea, appeared on Christian Broadcasting System Radio (CBS Radio)'s "Park Sung-tae's News Show" on the 12th and stated, "We are preparing comprehensive real estate measures that cover taxation, finance, and liquidity management."
■ "Ultra-high-priced and non-owner-occupied single homes also targeted"
Kim Yun-duk emphasized that the government intends to create a system in which owning a home does not generate economic gains. Specifically, he said, "We need to build a market where there is no reason to own a home if you are not living in it." He then made it clear that "owners of ultra-high-priced and non-owner-occupied single homes will, of course, be included in the scope of the tax reform."
Regarding existing tax benefits such as the long-term holding special deduction, he argued, "In reality, home prices have risen significantly, but compared with the taxes paid by salaried workers, the level is almost absurd," adding, "We need to overhaul the tax system as a whole."
Commenting on recent real estate market conditions, he noted, "In the past, listings did not come onto the market and prices kept rising, but now the number of listings is increasing," and positively assessed that "the most important point is that the overall pace of home price increases has narrowed considerably."
He continued, "Sentiment is crucial in the real estate market, and it is very important that expectations of rising home prices have sharply weakened." He diagnosed that "recently, there has been a major shift in public sentiment and market psychology, with people saying things like 'this time home prices really seem likely to fall' or 'if I had invested that money in stocks instead, my assets would have grown more.'" On the level of housing prices, he also directly raised the need for further declines. Kim Yun-duk said, "It is not easy to mention a specific price level, but I basically believe prices need to fall further and continue trending downward," stressing, "Only when real estate is no longer treated as a vehicle for speculation or short-term investment will prices finally return to their proper level."
He also hinted at a comprehensive real estate stabilization package that combines tax and financial policies. Kim Yun-duk explained, "We need to design tax adjustments and financial measures together," and added, "Liquidity management is extremely important, and we must prepare and deliberate on monetary policy in tandem."
■ Full mobilization of tax, finance, and supply measures
In response to concerns that stronger property holding taxes could be passed on to tenants, he pointed to stabilizing and lowering home prices as the fundamental solution. Kim Yun-duk explained, "The basic benchmark for setting jeonse prices is ultimately the home price," and said, "Jeonse prices cannot rise more than home prices, so establishing a trend of stabilizing real estate prices on a downward path will fundamentally benefit people without homes."
He added, "We will step up administrative support so that private redevelopment and reconstruction projects can move faster, and we will respond firmly to speculative capital by establishing a Real Estate Supervisory Service and other measures."
On the issue of housing supply, he acknowledged that it remains insufficient. Kim Yun-duk said, "During the previous administration's three years, preparations for housing supply were not properly made, so there is a real shortage," and continued, "We plan to rapidly increase supply in the very short term by quickly converting general commercial buildings into housing and by adopting models such as premium studio apartments for single-person households." He went on to emphasize, "We will also accelerate the supply of the Third New Towns and speed up housing provision by utilizing idle land in urban areas."
en1302@fnnews.com Jang In-seo Reporter