Jeongdo and Cheongdo Draw the Line on 'Multi-Homeowners Capital Gains Tax Relief'... Market Confusion Intensifies

Presidential Candidate Lee Jae-myung's Claim Met with Hong Nam-ki's "No Tax Plan Changes"
Conflicts Between New and Old Powers' Real Estate Policies Amid Song Young-gil's Government Pressure Remarks
Moves to Withdraw Multi-Homeowners' Listings... Market Confusion Grows Amid Party-Government Conflicts

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is speaking at the meeting of related ministers to inspect the real estate market held at the Government Seoul Office Building on the morning of the 22nd.
[Photo by Yonhap News]

The government and the Blue House clearly stated on the 22nd that they will not agree to the postponement of the capital gains tax surcharge on multiple homeowners. This clarified the government's position in response to the Democratic Party of Korea, which recently began preparing a bill to temporarily ease the capital gains tax surcharge on multiple homeowners and ordered the preparation of a plan to freeze holding taxes at an emergency party-government meeting on the 20th. However, as conflicts between the party, government, and the Blue House over real estate policies continue toward the end of the government's term, the already sluggish housing market is freezing up, fueling market confusion.

◇ Both Government and Blue House Say "No Plans"... Drawing a Line on Easing Capital Gains Tax for Multiple Homeowners = The government has firmly rejected the Democratic Party presidential candidate Lee Jae-myung's call for postponing the capital gains tax surcharge on multiple homeowners for two consecutive days. It appears that the party and government are engaged in a tense tug-of-war over real estate policies.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, chaired the 'Real Estate Market Inspection Meeting of Related Ministers' at the Government Complex Seoul in the morning and stated bluntly, "There are no plans to change the tax system regarding the postponement of the capital gains tax surcharge on multiple homeowners, considering market stability, policy consistency, and fairness issues." This reiterated the government's opposition following Prime Minister Kim Boo-kyum's public remarks on a radio program the previous day, saying, "It is difficult for the government to agree due to a loss of trust in government policies."

Lee Ho-seung, Director of the Blue House Policy Office, also reiterated opposition to the postponement of the capital gains tax surcharge on multiple homeowners, saying, "It is difficult to choose this option at this time." On CBS Radio's 'Kim Hyun-jung's News Show,' when asked if the position was to maintain the capital gains tax surcharge on multiple homeowners, he replied, "Yes," emphasizing, "It is difficult to choose this option at this time."

However, regarding easing the holding tax burden such as comprehensive real estate tax and property tax for single homeowners, he acknowledged, "We are reviewing supplementary measures to partially ease the tax burden on low- and middle-income single homeowners," effectively signaling acceptance. But since Deputy Prime Minister Hong narrowed the target to 'low- and middle-income' among single homeowners, it appears that ultra-high-priced homes, including those in the Gangnam 3 districts, will be excluded from the holding tax relief. This selective approach based on specific price criteria is expected to cause backlash.

◇ Clash Between New and Old Powers Over Real Estate Policy = Conflicts between the party and the government/Blue House over real estate tax policies continue. Despite opposition from the Blue House and government, Song Young-gil, leader of the Democratic Party, continues to pressure the government with his remarks. On a radio appearance that day, Song said, "Many lawmakers and the Blue House opposed easing the comprehensive real estate tax or capital gains tax (discussed after the April 7 by-elections) citing 'policy consistency,' but taxing on book cash income after raising house prices like this is punitive," adding, "Adjustment is necessary." He emphasized, "Taxation on unrealized house price increases and tax deferral for retirees are needed."

However, the Blue House is cautious about the appearance of conflict between the party and the Blue House, limiting the issue to a difference in perspective. Park Soo-hyun, Blue House Senior Secretary for Public Communication, said, "Candidate Lee said if it is difficult under the current government, it can be done under the next government, and Leader Song said he would create a working group to discuss real estate taxes, so I believe this issue is being coordinated accordingly."

◇ "Withdrawal of Multiple Homeowners' Listings" Intensifies Market Confusion = The conflict between the party and the Blue House over real estate policies is only increasing market confusion. In fact, there are even movements in the market where homeowners are withdrawing properties they had put up for sale due to tax burdens. The head of a real estate agency in Bangbae-dong, Seoul, said, "A multiple homeowner who had put an apartment up for sale due to financial difficulties contacted me to temporarily hold off," adding, "Both sales and purchase inquiries have stopped."

Since the beginning of this month, the apartment sales market in Seoul has been deepening into a transaction cliff. With the perception of peak house prices, loan regulations, interest rate hikes, and election variables, transaction volumes have sharply declined, and the recent differing voices between the party and government over easing the capital gains tax surcharge have further cooled the market.

According to the Seoul Real Estate Information Plaza, as of this date, the provisional number of apartment transactions in Seoul for November is 1,295, shrinking to about half of October's 2,313 transactions.

Experts point out that this transaction cliff situation may worsen. With buying demand already weakened by loan regulations and interest rate hikes, and with variables such as regime change ahead of the presidential election, market participants are increasingly adopting a wait-and-see attitude. Lee Eun-hyung, senior researcher at the Korea Institute of Construction Policy, said, "The current conflict between the party and government sends a signal to multiple homeowners that 'they can hold on,' and once the temporary postponement ends, the locking up of listings could ironically cause house prices to rise."

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