[Yoon Seok-yeol Elected] Supply Surge + Deregulation: The Real Estate Twin Engines

President-elect Yoon Suk-yeol is meeting with Yoo Young-min, Chief Presidential Secretary, and Lee Cheol-hee, Senior Secretary for Political Affairs, at the People Power Party headquarters in Yeouido, Seoul, on the afternoon of the 10th. On this day, Chief Secretary Yoo presented a congratulatory flower arrangement from President Moon Jae-in to President-elect Yoon. Photo by National Assembly Press Photographers Group

President-elect Yoon Suk-yeol is signaling a major reform of real estate policy, spearheaded by the twin pillars of ‘supply expansion’ and ‘regulatory easing.’ He attributes the current administration’s real estate failures to demand suppression-focused policies that overlooked supply and excessive regulations. Accordingly, President-elect Yoon is expected to launch a massive supply offensive akin to a supply bomb, while actively easing various regulations such as the Lease 3 Acts (right to request contract renewal, rent ceiling system, and reporting system).

◆ Supplying up to 1.5 million homes in the metropolitan area and a total of 2.5 million homes = One of the key pledges is to supply more than 2.5 million homes over the five-year term. Of these, 1.3 to 1.5 million homes will be supplied in the metropolitan area, where demand is concentrated. In particular, 300,000 youth cost-price homes will be supplied to support young people whose dream of homeownership is threatened by soaring housing prices. Additionally, 200,000 ‘First Homes near Transit Stations,’ half-priced homes for youth and newlyweds, will be supplied.

Regulations related to reconstruction and redevelopment projects will also be eased. President-elect Yoon has pledged to relax regulations on reconstruction, redevelopment, and remodeling to ensure sufficient housing supply in high-demand urban centers such as Seoul. For aging apartment complexes over 30 years old, exemptions from detailed safety inspections will be pursued. Especially, to revitalize remodeling and reconstruction in first-generation new towns such as Bundang, Ilsan, Pyeongchon, Sanbon, and Jungdong, the enactment of a ‘Special Act to Promote Redevelopment Projects in First-Generation New Towns’ will be pursued.

President-elect Yoon Seok-yeol is holding a victory greeting press conference on the morning of the 10th at the National Assembly Library in Yeouido, Seoul. Photo by National Assembly Press Photographers Group

◆ Tax and regulatory easing... Lease 3 Acts under review = President-elect Yoon has announced a major overhaul of tax policies, including the long-term abolition of the comprehensive real estate holding tax (종부세). The plan is to integrate the 종부세 with property tax in the long term. In the short term, tax burdens will be eased mainly for single-homeowners. First, the 종부세 rate for single-homeowners will be reduced to the pre-Moon Jae-in administration level (0.5?2.0%). The official real estate prices used as the tax base will be rolled back to 2020 levels by adjusting the fair market value ratio. For multi-homeowners, the application of the capital gains tax surcharge will be temporarily excluded for up to two years. Regarding acquisition tax, first-time homebuyers will be exempted from tax or subject to a flat 1% rate, and progressive taxation on owning two or more homes in regulated areas will be eased.

The Lease 3 Acts, which include the right to request contract renewal, rent ceiling system, and rent reporting system, will be comprehensively reviewed. Although introduced to protect tenants, these laws have been criticized for reducing available listings, causing rent and lease price surges, and accelerating the shift from Jeonse (lump-sum deposit lease) to monthly rent. However, rather than full abolition, partial amendments and supplementary measures are expected to be implemented to maintain trust in the system. Kyung-hee Yeo, a researcher at Real Estate R114, said, "Completely scrapping a system introduced just two years ago could cause further market confusion. Especially with contract renewal rights expiring in the second half of this year, which may destabilize the rental market, a cautious approach is necessary."

◆ Question marks over feasibility within the term... concerns over housing price stimulation = Experts regard President-elect Yoon’s pledge to expand supply as a “desirable direction,” but express doubts about its feasibility. Professor Lim Jae-man of Sejong University’s Department of Real Estate said, "Although 2.5 million homes have been proposed, it is unclear how they will actually be supplied." He added, "Public-led projects have some potential, but it will be difficult to attract private sector participation."

Since President-elect Yoon’s pledge emphasizes regulatory easing, there are concerns that it could stimulate speculative expectations and drive up housing prices. Professor Lim said, "While regulatory easing is necessary, abolishing the price ceiling system and the reconstruction excess profit recovery system could concentrate real estate development profits among a few, which is likely to lead to speculation in reconstruction and redevelopment sites." Additionally, Song Seung-hyun, CEO of City and Economy, said, "Measures to ease safety inspections and revitalize redevelopment projects could lead to price increases centered on reconstruction complexes in Seoul."

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