The Government Prepares Tenant Budget Forecasting Real Estate Price Rise and Stock Market Decline Next Year

Assemblyman Yu Kyung-jun: "Reduced transaction volume and price increase forecasted due to real estate 'maemul jamkim'"

[Sejong=Asia Economy Reporter Kim Hyunjung] The Ministry of Economy and Finance has predicted that real estate prices will rise and the stock market will decline next year, and has prepared the revenue budget accordingly.

According to information confirmed by Yook Kyung-jun, a member of the National Assembly's Planning and Finance Committee from the People Power Party, on the 6th, the Ministry of Economy and Finance projected total national tax revenue of 338.6 trillion won next year based on assumptions of rising real estate prices and falling stock prices. The ministry estimated capital gains tax and securities transaction tax based on the Korea Research Institute for Human Settlements' real estate market forecast scenario and the Capital Market Institute's stock market forecast scenario for next year.

Next year's capital gains tax is expected to collect 22.4 trillion won, a decrease of 11.9% compared to the forecast presented in this year's second supplementary budget. The securities transaction tax was also estimated to decrease by 9.0% to 7.5 trillion won. According to Representative Yook, this revenue estimate was made on the premise of a "bear market" in stocks. However, the ministry forecast that the comprehensive real estate holding tax (종합부동산세) will increase by 29.6% to 6.6 trillion won. This figure reflects the average increase rate of official property prices over the past five years, the already scheduled fair market value ratio and official price realization rate, and also considers the effects of the amendment to the comprehensive real estate tax law.

While the ministry predicted a decrease in capital gains tax based on the expectation of reduced real estate transaction volume, it forecast an increase in the comprehensive real estate holding tax because it expects real estate prices themselves to rise. Ultimately, Representative Yook analyzed that the Ministry of Economy and Finance assumed a "lock-in" phenomenon in the real estate market, where transaction volume decreases but prices rise, and estimated revenue accordingly.

He stated, "The Ministry of Economy and Finance internally believes that due to a shortage of real estate supply, prices will skyrocket, causing the comprehensive real estate holding tax to increase by 30%," and criticized, "This contradicts the earlier announcement by Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki that housing prices cannot continue to rise." He added, "The stock market is currently overheated beyond the government's expectations, so it is forecasted to decline next year, leading to a decrease in securities transaction tax."

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