[Reporter’s Notebook] One Week of the July 10 Real Estate Measures That Only Increased Confusion

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance (center), Kim Hyun-mi, Minister of Land, Infrastructure and Transport (right), and Jin Young, Minister of the Ministry of the Interior and Safety, are moving to announce the comprehensive real estate measures at the Government Seoul Office on the 10th. Photo by Kang Jin-hyung aymsdream@

[Sejong=Asia Economy Reporter Joo Sang-don] "First, I would like to apologize for the fact that concerns and instability in the real estate market have not subsided despite the recent announcement of the June 17 real estate measures."

This was a statement made by Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki when he announced supplementary measures to stabilize the housing market on the 10th, a week ago. It was both an explanation of the rationale behind the July 10 measures and an expression of determination to truly stabilize the real estate market this time.

However, the government's expectations have so far missed the mark. Even after the July 10 measures, apartment sale prices and jeonse prices in Seoul have continued to rise. According to the Korea Real Estate Board, the jeonse price increase rate in Seoul for the second week of this month (as of the 13th) rose from 0.10% last week to 0.13% this week. This means that concerns that pressure on multi-homeowners would lead to increases in jeonse and monthly rent prices have materialized.

Voices of dissatisfaction with the comprehensive real estate tax are spreading to all homeowners regardless of whether they own multiple homes. This is because, separate from raising the top tax rate for multi-homeowners to 6%, the government is re-pursuing a plan to raise the comprehensive real estate tax rate for single-homeowners from the current 0.5?2.7% to 0.6?3.0%, as announced in the December 16 measures last year. Despite the outcry from single-homeowners, the government has drawn a line by stating, "There will be no easing of the comprehensive real estate tax for single-homeowners."

The failure to preemptively block multi-homeowners' potential tax avoidance has also fueled market confusion. As concerns grew that multi-homeowners would choose gift transfers, which incur relatively lower taxes, instead of disposing of properties, the ruling party belatedly proposed a bill to impose a gift acquisition tax rate of up to 12% on multi-homeowners.

Regarding the lifting of development restrictions (Greenbelt) to secure supply volume, the government remains inconsistent. Less than a day after Deputy Prime Minister Hong Nam-ki’s remark about "considering lifting" the restrictions, Park Sun-ho, Vice Minister of the Ministry of Land, Infrastructure and Transport, the responsible ministry, refuted it by saying, "We are not considering it." However, the Ministry of Land, Infrastructure and Transport eventually indicated it would "engage in serious discussions," suggesting reconsideration. No one can confidently guarantee that the government’s position will not be reversed again.

Deputy Prime Minister Hong emphasized the three major principles of real estate policy as "protecting actual demanders, eradicating speculative demand, and tailored measures." It is time to reflect on whether the balance among these principles has been broken due to an excessive focus on eradicating speculative demand.

This content was produced with the assistance of AI translation services.