The Hidden Real Estate Politics Behind the Surge in Officially Announced Prices

On the 15th, the exterior view of 'The Penthouse Cheongdam' in Gangnam-gu, Seoul, which was recorded as the most expensive apartment nationwide. According to the Ministry of Land, Infrastructure and Transport on the same day, The Penthouse Cheongdam (407.71㎡) was evaluated at 16.32 billion KRW for this year's official price, making it the most expensive residential housing among apartment complexes nationwide. Calculated per pyeong, the price is 132 million KRW. Photo by Hyunmin Kim kimhyun81@

"The majority of houses actually saw a decrease in taxes."

This is the government's explanation regarding the sharp increase in tax burdens due to the largest rise in apartment official prices in 14 years. They claim that the proportion of houses subject to comprehensive real estate tax remains insignificant among all houses. However, the market views this as a weak excuse that divides people into 'multi-homeowners vs. single-homeowners' and 'speculators vs. genuine buyers.' Criticism has even been raised that the Moon Jae-in administration's real estate politics are hidden behind this official price surge.

According to the Ministry of Land, Infrastructure and Transport on the 16th, this year's increase rate of official apartment prices reached 19.08%, three times last year's 5.98%. It is the highest since 22.7% during the Participatory Government in 2007, marking the largest rise in 14 years. With the official prices soaring, the number of apartments exceeding 900 million KRW (based on one household, one house) subject to comprehensive real estate tax surged. Nationwide, there are 524,620 households, a 69.6% increase from last year. Although this is an unprecedented tax bomb, the standards are ambiguous. In Daejeon, apartment prices rose 18% last year, and official prices increased by 20.6%. Meanwhile, in Gangnam-gu, Seoul, apartment prices rose only 0.1%, but official prices increased by 13.96%.

Regarding concerns that the burden on citizens has become excessive due to the official price increase, the Ministry stated, "From this year, the tax rate for single-homeowners with official prices below 600 million KRW will be lowered by 0.05 percentage points, so these taxpayers will actually see a decrease in property tax compared to last year." They added, "The proportion of houses with official prices below 600 million KRW accounts for 92.1%." While some places saw increases, they claim that 9 out of 10 houses experienced a decrease.

In response, an industry insider pointed out, "The perception that divides citizens into either homeless or multi-homeowner speculators is still reflected as is," and criticized, "Real estate politics, not real estate policy, are happening just like during the Participatory Government."

The Participatory Government took a one-sided approach of strengthening regulations, saying, "We will control real estate even if the sky splits." When the August 31, 2005 real estate measures were announced, then-Economy Deputy Prime Minister Han Duck-soo boldly declared, "Real estate speculation is over." However, real estate prices were not controlled, and near the end of the administration, former President Roh Moo-hyun had to admit the failure of real estate policy. President Moon Jae-in also repeatedly emphasized, "I am confident about real estate," and in the recent Korea Land and Housing Corporation (LH) speculation scandal, instead of apologizing or reflecting, he re-declared a "war on speculation."

The pattern of real estate taxes extracted from multi-homeowners being diverted to the ruling party's populist policies is expected to become even more evident. Last year, corporate tax revenue decreased by 16 trillion KRW compared to the previous year, but total national tax revenue only fell by 8 trillion KRW, thanks to taxes collected from real estate capital gains tax and comprehensive real estate tax. Last year, comprehensive real estate tax revenue increased by about 930 billion KRW from the previous year, reaching 3.6 trillion KRW, and this year, with a significant increase in the number of houses subject to comprehensive real estate tax, tax revenue is expected to surge sharply.

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