GTX, Comprehensive Real Estate Tax, LTV... Real Estate Policies Fluctuate Ahead of Election

GTX-D Line Extension Reviewed After One Month
Ministry of Land Steps Back Amid Gimpo Residents' Opposition
Discussions to Ease Strengthened Comprehensive Real Estate and Capital Gains Taxes
'Housing Price Stability + Regulation Easing'... Only Increasing Confusion

[Asia Economy Reporter Moon Jiwon] The government has decided to consider extending the Western Metropolitan Express Railway (GTX-D), which has sparked controversy known as the ‘Gim-bu-seon (Gimpo~Bucheon)’ issue and caused backlash from residents in the Gimpo area, to run directly to Yeouido or Yongsan Station in Seoul. After the 4th National Railroad Network Construction Plan was unveiled at the end of last month, the government stepped back within less than a month, saying it would "find a solution" as the backlash was greater than expected.

However, a significant number of Gimpo residents still insist that the route should be directly connected through Gangnam to Hanam, while voices from other regions question, "Do they give in to all demands if people throw tantrums?" making coordination appear difficult. There are also criticisms that policies are wavering as the ruling party and government show signs of easing comprehensive real estate tax, capital gains tax, and loan regulations, and now even attempting to revise the GTX route ahead of next year’s presidential election, seemingly trying to gauge public opinion.

According to the government and real estate industry on the 17th, the Ministry of Land, Infrastructure and Transport has begun reviewing a plan to operate the GTX-D line directly to Yeouido or Yongsan Station by sharing tracks with the GTX-B line, which runs from Songdo in Incheon to Maseok in Namyangju. This would allow Gimpo residents to travel to Yeouido or Yongsan Station without transfers, which the government believes will somewhat reduce complaints from those commuting to downtown Seoul.

However, there are significant concerns that easily overturning decisions based on research results from professional institutions like the Korea Transport Institute due to public opinion or political circumstances could cause side effects. With many other regions demanding expanded transportation networks that significantly impact housing prices ahead of next year’s presidential election, this could set a ‘bad precedent.’

The extension of the GTX-D line to Yeouido and Yongsan falls short of the direct connection to Gangnam demanded by Gimpo and Incheon residents, and since this plan could be finalized only after negotiations following the selection of the GTX-B private operator, there are criticisms that it may end up being merely a ‘token gesture.’

On the 30th of last month, residents near Gimpo, including the Pan-Citizen Emergency Countermeasures Committee, held placards at a press conference in front of the National Assembly, requesting the direct connection of GTX-D to Gangnam and urging traffic measures for the western region. [Image source=Yonhap News]

The ruling party and government are showing moves to ease not only GTX but also key existing real estate policies such as the comprehensive real estate tax, property tax, capital gains tax, and loan regulations. The Democratic Party of Korea has begun serious discussions on these issues through the Real Estate Special Committee led by Chairman Kim Jin-pyo. Regarding property tax, raising the exemption threshold for single-homeowners from the current official appraisal price of 600 million KRW to 900 million KRW is considered a strong possibility.

The problem lies with the comprehensive real estate tax, capital gains tax, and loan regulation easing. There are mentions of raising the comprehensive real estate tax threshold from the current 900 million KRW to 1.2 billion KRW, easing the heavy taxation on short-term held homes starting next month, or raising the exemption threshold for single-homeowners from 900 million KRW to 1.2 billion KRW. All these measures are completely opposite to the real estate policies of the previous Moon Jae-in administration.

As efforts to stabilize housing prices continue, the need to ease regulations to soothe worsened public sentiment on real estate has led to policy wavering. There are voices saying, "The government tries various things while watching public opinion, and if it doesn’t work, it flips policies like turning over a hand." The ruling party is reportedly considering significantly easing the loan-to-value (LTV) ratio limit, which has been continuously tightened, to up to 90% for genuine homebuyers without homes. In regulated areas, the LTV would remain limited to 40%, but for young homebuyers without homes in non-regulated areas, a 70% LTV (with a 20% preferential rate) would be applied.

An anonymous real estate industry expert said, "Since the government’s real estate policies have failed to stabilize housing prices, it may be desirable to make some corrections, even if late," but added, "However, discussions should not continue with the purpose of merely appeasing public dissatisfaction to gain support, rather than reflecting on policy failures."

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