"Just Lived in a Tiny House the Size of a Bean" - Will Real Estate Sentiment Ignite Again?

Real Estate Sentiment 'Boiling' Amid Soaring Official Prices... Sejong Up 71%
Some Say "Paying Taxes Proportional to House Price Increase Is Natural"
Experts Warn "Citizens May Feel Frustration and Deprivation"

Views of apartments and buildings in Seoul city. The photo is unrelated to specific expressions in the article. [Image source=Yonhap News]

[Asia Economy Reporter Heo Midam] # Office worker Kim Mo (36) recently sighed over the tax burden caused by the soaring official property prices. He said, "Who asked for the house prices to go up? The government stirred up house prices with policy failures and then raised the official property prices absurdly," adding, "If house prices go up and I have to pay more taxes, will the government refund the taxes if house prices go down?" He vented, "Everything seems to be rising except my salary. House prices are up, so I can't even move, and I feel really frustrated."

This year, the official property prices of apartment complexes nationwide surged by nearly 20%, raising citizens' concerns about a 'tax bomb' related to real estate, such as comprehensive real estate tax. In particular, while those owning properties with official prices under 600 million KRW will not see increased tax burdens, owners of high-priced apartments valued at 900 million KRW or more and multiple homeowners are expected to face increased tax burdens such as property tax.

Given this situation, there are criticisms that the government, which failed to curb the rapid rise in house prices due to real estate policy failures, is only increasing the tax burden. Experts expressed concerns that with the collapse of trust in real estate policies following the Korea Land and Housing Corporation (LH) scandal, a sharp rise in official property prices will deepen the public's sense of frustration.

According to the 'Official Apartment Complex Property Price Proposal' released by the Ministry of Land, Infrastructure and Transport on the 15th, the average nationwide official apartment complex property price increase rate this year was 19.08%. This is the largest increase in 14 years since 2007 (22.7%) and more than three times last year's increase rate (5.98%).

According to the proposal, Sejong City recorded an average official apartment complex property price increase rate of 70.68% this year. Following were Gyeonggi (23.96%), Daejeon (20.57%), Seoul (19.91%), Busan (19.67%), and Ulsan (18.68%), among 10 metropolitan cities and provinces that recorded double-digit increase rates. The proposal will undergo a public opinion hearing process with homeowners from the 16th and will be finalized on the 29th of next month.

Official property prices serve as the basis for levying taxes in 60 areas, including property tax, health insurance premiums, and basic pension calculations. If official property prices rise significantly, the tax burden for property tax and comprehensive real estate tax, which are levied based on official property prices, will also increase.

Apartment buildings in downtown Seoul. The photo is unrelated to specific expressions in the article. [Image source=Yonhap News]

As a result, citizens' reactions opposing the sharp rise in official property prices continue on real estate communities. They pointed out that the increase in official property prices is too large compared to the rise in house prices and lamented that it is useless even if they manage to get a house with difficulty.

A netizen who revealed living in Sejong City said through a real estate community, "They say they are stabilizing house prices, but raising official property prices this much seems problematic. The official price increase rates in other regions are 10-20%, but ours is 70%. I don't understand it."

Another netizen said, "I think I will have to tighten my belt again to pay taxes this year. I have just lived in a tiny house, so I don't know what to do," adding, "It feels like I am earning money just to pay taxes."

In particular, the increase in official property prices hits retirees who lack the capacity to pay taxes even harder. They complain about the burden of property taxes and claim that it is harsh treatment after having worked hard all their lives to buy a house.

A netizen who lives in an apartment he owns in Seoul after retiring from work said, "I have no fixed income, so I am worried about the tax increase. Also, the official property prices are rising too quickly, which makes me even more worried."

However, some argue that it is natural to pay taxes in proportion to the rise in house prices. One netizen said, "I am also a citizen of Sejong, but since house prices have more than doubled, isn't it natural that the official property prices should rise proportionally? No one wants to pay a lot of taxes, but taxing in proportion to the increased housing price is reasonable, so I don't understand why there is tax resistance."

Experts pointed out that with the collapse of trust in real estate policies due to the LH scandal, an increase in the burden of property taxes will deepen the public's sense of frustration.

Professor Kim Taegi of Dankook University's Department of Economics said, "While LH has become a hotbed of corruption and bribery, the official property price increase rate has also risen. Public backlash is inevitable. Especially for retirees without income, the backlash will be stronger," expressing concern that "the public may express anger toward real estate policies beyond frustration and loss."

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