Hong Nam-ki "Considering Relaxation of Floor Area Ratio and Height Restrictions... Supply Measures to be Announced Early Next Week" (Comprehensive)

Deputy Prime Minister for Economy Hong Nam-ki attended the plenary session of the Planning and Finance Committee held at the National Assembly on the 28th, listening to the questions from the members with a tightly closed mouth. Photo by Yoon Dong-ju doso7@

[Sejong=Asia Economy Reporter Kim Hyunjung] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, declared on the 28th that he will take the lead as the 'control tower' for real estate stabilization measures and plans to announce housing supply measures early next week. He also shared the recent discussion directions with related ministers, including easing floor area ratio and height restrictions and discovering new housing sites.

Deputy Prime Minister Hong appeared at the National Assembly's Planning and Finance Committee plenary session and responded to a question from Yoon Hoo-duk, a Democratic Party lawmaker and committee chairman, about the timing of the housing supply measures announcement. He said, "If the legislation on real estate measures is finalized in the National Assembly early next week, I think it is appropriate to announce the measures around the same time." He explained, "When the July 10 measures were announced, we said we would announce supply measures by the end of July, but an important variable is whether the real estate-related laws discussed today will be processed in this extraordinary session of the National Assembly," adding, "The government's review is largely complete."

However, when asked about the details by Yang Hyang-ja, a lawmaker from the same party, he said, "Although we have not announced it externally, we are continuously holding meetings and have almost prepared all the proposed measures," adding, "I can share the progress, but it is difficult to disclose the details as it may shock the market." He stated, "We will prepare the measures keeping in mind that no part of the content should be leaked before the government's final announcement."

Regarding whether the government's real estate measures will be effective, he said, "If the legislation (on the December 16, June 17, and July 10 measures) passes properly within a short period, the policy expectation effect will work in the market," adding, "Since this measure imposes heavy taxes on multi-homeowners, it is likely to have an effect. Although the policy will not work 100%, it will have a considerable impact."

He anticipated a tax revenue increase of about 880 billion won in total, combining individuals and corporations, from the real estate measures. He emphasized, "This measure was not intended to increase tax revenue, but by raising the comprehensive real estate tax rate, there will be additional tax revenue over several years," adding, "However, only 5% of our citizens pay the comprehensive real estate tax. The 95% who do not pay it are not affected by this measure." He also said, "Considering both individuals and corporations, the total expected tax revenue increase from this real estate measure is about 880 billion won."

On the 28th, Kim Tae-heum and other members of the Future United Party belonging to the National Assembly's Planning and Finance Committee left the meeting room in protest against the meeting procedure during the plenary session of the National Assembly's Planning and Finance Committee. Photo by Yoon Dong-joo doso7@

When concerns were raised about the possibility of a surge in jeonse (long-term deposit lease) prices as a balloon effect due to tax tightening, he appealed for the passage of related laws in the National Assembly. He stressed, "If the three laws related to jeonse and monthly rent are not passed together in the July extraordinary session, confusion in the jeonse and monthly rent market could worsen," urging, "Please make sure to pass the three laws on jeonse and monthly rent together."

Furthermore, Deputy Prime Minister Hong pointed to 'excess liquidity' as one of the causes of the recent rapid rise in real estate prices. Responding to lawmaker Kim Joo-young's remark that follow-up measures are needed to prevent money from flooding into real estate, he said, "There have been many criticisms about excess liquidity, and it is true that liquidity flowing into real estate has caused overheating," adding, "I think the solution is to loosen the economy somewhat and create many productive investment destinations." He added, "Fundamentally, the economy should improve so that specific investment destinations can be created." Earlier, Minister of Land, Infrastructure and Transport Kim Hyun-mi made a similar statement during a government questioning session in the National Assembly on the 23rd.

Meanwhile, the so-called 'Real Estate 3 Acts,' follow-up bills to the 'July 10 Real Estate Measures' that expand comprehensive real estate tax and income tax on multi-homeowners and owners of high-priced homes and increase the real estate acquisition tax burden on corporations, passed the National Assembly standing committee on the same day. The amended bill, approved amid the United Future Party's abstention from voting, is scheduled to be submitted to the plenary session after passing through the Legislation and Judiciary Committee by August 4.

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