Raising Official Property Prices While Excluding Benefits... Continued 'Divide and Rule' of Multi-Homeowners

Sharp Rise in Officially Announced Prices... Heavy Tax Burden Expected for Multi-Homeowners Next Year
March Relief Measures Focused on Single-Homeowners
Actual Residence Benefits for Coexistence Lessors Exclude Multi-Homeowners
Criticism That 'Policy Effectiveness is Undermined' Due to Divisive Approach

Real estate agency in Songpa-gu, Seoul [Image source=Yonhap News]

Next year, the official prices of detached houses and apartment buildings are expected to record another 'record-breaking' increase following this year, raising the possibility of a 'tax bomb' for multi-homeowners and owners of high-priced homes. Although the government announced plans to devise measures to ease the burden of property taxes by March next year, these measures are limited to single-homeowners, and the policy stance of strengthening taxes and regulations on multi-homeowners remains unchanged, so the effect is expected to be limited. Industry insiders point out that the government's 'divide and rule' approach not only diminishes the policy's effectiveness but also exacerbates side effects such as tax pass-through and a transaction freeze.

According to the Ministry of Land, Infrastructure and Transport and the real estate industry on the 23rd, the increase in the official prices of standard detached houses next year is concentrated on high-priced homes. The nationwide average increase rate is 7.36%, but for homes priced below 900 million KRW, the increase is 5.06%, which is lower than the average, while homes priced between 900 million KRW and 1.5 billion KRW rose by 10.34%, and those above 1.5 billion KRW surged by 12.02%, far exceeding the average. The realization rate of the official prices for standard detached houses also rose slightly from 53.6% to 54.8% for homes under 900 million KRW, but jumped from 63.2% to 67.1% for those above 1.5 billion KRW.

The increase rates by region were also higher in Seoul and the Gangnam area. Gangnam-gu (12.21%), Seocho-gu (12.33%), and Songpa-gu (12.03%), which have many high-priced complexes, showed about twice the increase compared to Nowon-gu (7.15%), Dobong-gu (5.71%), and Gangbuk-gu (6.17%), which do not. Ham Young-jin, head of the Zigbang Big Data Lab, said, "In Seoul, tax burdens are likely to increase more in high-end detached houses in Gangnam and along the Han River, including Samsung, Cheongdam, Nonhyeon, Bangbae, Hannam, Itaewon, and Seongbuk-dong, and in Gyeonggi Province, in detached houses around Pangyo, Wirye, Gwanggyo, and Gwacheon."

The reason for the difference in increase rates by housing price is due to the 'Realization Plan for Real Estate Official Prices' announced by the government last November. At that time, the government stated that it would raise the realization rate of official housing prices to 90%, increasing prices below 900 million KRW slowly over 10 to 15 years, while prices above 900 million KRW would be raised steeply over 5 to 10 years. The intention was to protect ordinary citizens from a sharp increase in tax burdens caused by rapid house price rises, but multi-homeowners are effectively facing punitive taxes, causing various side effects such as tax resistance, tax burden pass-through, and rental conflicts.

Recently, the multi-homeowner capital gains tax surcharge deferral proposed by Lee Jae-myung, the Democratic Party presidential candidate, was effectively scrapped due to opposition from the Blue House. Meanwhile, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated the day before, "We are reviewing supplementary measures to ease the property tax burden for single-homeowners," which has further fueled anger among multi-homeowners. In fact, the Ministry of Land, Infrastructure and Transport is known to have effectively excluded multi-homeowners from measures to reduce property tax and health insurance burdens. A homeowner in Seoul said, "Even in taxes where fairness is a principle, dividing sides seems to mean there is no principle."

The problem is that such a policy approach could deepen the transaction freeze and increase confusion in the real estate market. Without incentives and only strengthened regulations, multi-homeowners are reluctant to list properties, creating a 'let's just hold on' atmosphere. Recently, the government also reduced the policy's effectiveness by excluding multi-homeowners from benefits such as capital gains tax exemption for actual residence granted to win-win landlords. Ham said, "We are closely monitoring tax policy changes that could offset the increase in official prices and reduce tax burdens, and transaction and price movements are expected to be limited."

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