Real Estate Official Prices to Increase Up to 90% of Market Value

[Asia Economy Reporter Yoo In-ho] The government is pushing forward a 'Plan to Realize Publicly Announced Property Prices' that raises real estate public prices to up to 90% of market prices.

The realization rate will increase by about 3 percentage points annually. As a result, apartments and other multi-family housing will achieve the realization target over 5 to 10 years depending on price range, single-family houses over 7 to 15 years, and land over 8 years.

The Ministry of Land, Infrastructure and Transport and the Ministry of the Interior and Safety recently established and announced on the 3rd the ‘Plan to Realize Publicly Announced Property Prices’ under the 'Act on Public Announcement of Real Estate Prices' to ensure that public prices reflect appropriate market levels. Additionally, to stabilize housing for low-income households and alleviate the tax burden resulting from the price realization, a ‘Property Tax Burden Relief Plan’ was also announced.

The Ministry of Land explained that since high-priced real estate had a lower realization rate than low-priced properties, causing inequity, they had rapidly increased the realization rate mainly for properties priced over 900 million KRW, which in turn lowered the realization rate for low-priced properties, making an increase urgent.

However, since sharply raising the public prices of mid- to low-priced houses would increase the tax burden on ordinary citizens, the plan is to raise these prices gradually over a longer period compared to high-priced houses.

Accordingly, publicly announced real estate prices will be gradually realized up to about 90% of market prices. As of 2020, the realization rates were 65.5% for land (based on standard land), 53.6% for single-family houses (based on standard houses), and 69.0% for multi-family housing, but once realization is complete, all types will be at the same level of 90%.

Multi-family housing such as apartments will be adjusted to 90% over 10 years. For properties under 900 million KRW with large realization gaps, a ‘pre-balance securing’ phase will last 3 years, followed by 7 years of increases. Until 2023, the rate will rise slightly by less than 1 percentage point annually, then from 2024 to 2030, it will increase by 3 percentage points annually to reach the final 90%. For properties over 900 million KRW, the rate will increase by about 3 percentage points annually over 5 to 7 years.

Single-family houses will be adjusted from a 2020 realization rate of 53.6% to 90% over 15 years by 2035. Properties under 900 million KRW will follow the same ‘pre-balance securing’ for 3 years as multi-family housing, then increase over 12 years. Properties over 900 million KRW will increase by 3 to 4 percentage points annually over 7 to 10 years.

Land will be increased from a 2020 realization rate of 65.5% to 90% over 8 years by 2028.

The plan to realize public prices will be applied starting from the 2021 public price assessment. The Ministry of Land will form an inter-agency consultative body to annually review performance against realization rate targets and include the results and review findings in an annual report on public prices submitted to the National Assembly.

Every three years, a comprehensive review of progress will be conducted to analyze the impact not only on public prices but also on related systems such as taxation, charges, and welfare programs, and the plan will be supplemented as necessary.

A Ministry of Land official said, “Issues such as low market reflection rates of 50-70% and disparities in realization rates by type and price range have been continuously pointed out,” adding, “Since realization is based on accurate market surveys, we will clarify assessment standards and significantly strengthen verification and review of assessed market prices.”

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