Market Stirred Ahead of 'Jongbuse Bomb'... Record-Breaking Up to Twice the Highest Rate

Interest in Multi-Homeowner Listings
"Holding Out Until the Presidential Election" Forecast

Real estate stock photo / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Jo Gang-wook] As the season for imposing the comprehensive real estate tax (종합부동산세) approaches, the housing market is becoming unsettled. Homeowners who have received unprecedentedly high tax bills, at least double the previous amounts, are putting their properties on the market due to the heavy tax burden, drawing attention to whether housing prices will reach a turning point.

According to the real estate industry on the 7th, not only multi-homeowners but also owners of high-priced single homes are expected to receive historically high comprehensive real estate tax bills this year, which feel very different compared to last year.

This is because the official property prices have surged significantly following the government's roadmap for realistic price adjustments, and from this year, the tax rates applied to owners of three or more homes and two homes in regulated areas have increased sharply from the previous 0.6?3.2% to 1.2?6.0%.

The fair market value ratio, which is the basis for the comprehensive real estate tax, will also rise from 90% last year to 95% this year. Furthermore, it is scheduled to increase to 100% next year, meaning the holding tax burden is expected to continue into next year.

According to analysis by Woo Byung-tak, head of the Real Estate Investment Advisory Center at Shinhan Bank, even owning just two units?an 84㎡ unit in Daechi Eunma Apartment and a unit in Mapo-gu’s Raemian Prugio?will see holding taxes jump from around 30 million KRW last year to nearly 75 million KRW this year, more than double.

The holding tax assessment date is June 1st, and this year’s comprehensive real estate tax subjects were already determined among homeowners holding properties as of June 1st. However, combined with recent government loan regulations, sluggish transactions, and the appearance of urgent sale listings, tax offices on the front lines report an increase in late-stage sales consultations. Because of this, some analysts suggest that the housing market has reached a turning point recently, with expectations that this may gradually lead to an increase in listings.

On the other hand, many forecasts suggest that the number of listings will not immediately increase due to the comprehensive real estate tax. This is because those who intended to sell in preparation for the already strengthened holding tax have already done so, and measures such as prior gifting have been taken. Additionally, since June, capital gains tax has increased up to 75%, making it difficult for multi-homeowners to sell even if they want to.

In particular, the presidential election scheduled for March next year is expected to be a major variable. Yoon Seok-youl, the People Power Party’s presidential candidate, has pledged to fully review the comprehensive real estate tax. He has promised to reduce capital gains tax and property tax burdens for single-homeowners and to temporarily cut capital gains tax by 50% for multi-homeowners.

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