Homeless People Are 'Byeorakgeoji', Homeowners Are 'Jeokpaeseoryeok'... Everyone Was Outraged

On the 10th, apartments in Seoul viewed from the Lotte World Tower observatory 'Seoul Sky' in Songpa-gu, Seoul

Various analyses are emerging regarding the factors behind the 20th presidential election results, which were decided by a margin of 0.73 percentage points. Among the decisive factors, the real estate issue is cited as one of the key influences. Regarding real estate, both homeowners and non-homeowners, as well as landlords and tenants, are united in condemning the Moon Jae-in administration's failures.

◆Homeowners and landlords hit with tax bombs and labeled as corrupt forces... Real estate double standards too= According to KB Kookmin Bank, from the inauguration of the Moon Jae-in administration in May 2017 until February 2022, apartment prices in Seoul rose by 61.59%. Nationwide, the change rate was 37.59%. This is the highest among all governments since KB Kookmin Bank began surveying housing prices in 1986, except for the Roh Tae-woo administration (February 1988 to February 1993).

The median house price (the middle price when houses are lined up by price) for Seoul apartments rose from 603.5 million KRW in May 2017 to 1,087.75 million KRW currently, an increase of 481.4 million KRW. This contrasts with the previous Park Geun-hye administration, where prices rose from 465.45 million KRW to 599.16 million KRW, an increase of 133.71 million KRW.

Despite the increase in asset value due to rising house prices, homeowners were enraged. The official apartment prices in Seoul rose by 19.9% year-on-year, and the number of single-homeowners newly subject to comprehensive real estate tax increased significantly, not only in Gangnam but also in northern Seoul areas. There was a flood of criticism that imposing excessive taxes on single-homeowners for unrealized capital gains was unfair. Multi-homeowners were labeled as 'speculators' and 'corrupt forces.' Health insurance premiums for regional subscribers also surged.

The 'real estate double standards' added fuel to the fiery anger.

Park Ju-min, a member of the Democratic Party who was the main proposer of the amendment to the lease law limiting rent increases to 5%, was found to have raised the rent (monthly rent) of his own apartment by 9% just before the bill passed. Kim Sang-jo, the Blue House policy chief, was also found to have raised the deposit of his own apartment by 14% (120 million KRW) two days before the new lease law took effect.

The Blue House said, "Sell all but one," but according to the Citizens' Coalition for Economic Justice, as of 2020, 12 Blue House aides owned a total of 25 houses. Some submitted resignation letters rather than selling their houses, leading to sarcastic remarks such as "houses over jobs."

Expectations are rising among major reconstruction project complexes, especially in Seoul, following Yoon Suk-yeol, the president-elect of the 20th Republic of Korea, pledging to ease reconstruction regulations. According to industry sources, although there has not been an immediate surge in actual transactions or inquiries right after the presidential election results were announced, asking prices for apartments in major reconstruction project complexes in Seoul are being set higher than before, and some listings previously on the market are being withdrawn.
Photo by a reporter on the 11th in front of an apartment complex in Seoul, displaying a banner welcoming President-elect Yoon Suk-yeol.

◆Non-homeowners and tenants forced to leave Seoul due to soaring house prices= Non-homeowners and tenants had to shed 'tears of blood' beyond anger. After the new lease law, which includes the right to request contract renewal and caps on rent increases, was implemented, the price of jeonse (long-term deposit lease) continued to surge. Tenants who could not afford the deposits were pushed to the outskirts of the metropolitan area.

According to the Korea Real Estate Board, from 2020 to 2021, the average jeonse price of housing in Seoul rose by 28.88%. As reasons for the rise in jeonse prices, 35% of real estate agents cited "a decrease in jeonse supply after the lease law was applied," followed by increased demand for jeonse due to rising housing prices (21%) and a decrease in new housing supply (20%) (KB Real Estate report). As a result, a staggering 567,366 people moved out of Seoul to other regions in the past year.

The burden of taxes was passed on to tenants, accelerating the phenomenon of 'jeonse turning into monthly rent.'

According to a report by the Korea Economic Research Institute under the Federation of Korean Industries titled "Analysis of the Impact of Holding Tax Increase on Housing Rent Increase," when the holding tax rate, including the comprehensive real estate tax, rises by 1.32 percentage points, the proportion of monthly rent increases by about 5%. This is interpreted as the rental market structure shifting toward monthly rent preference as landlords try to compensate for increased tax burdens through monthly rent income.

Non-homeowners remaining in Seoul had to bear the skyrocketing monthly rents. As of January, the average monthly rent in Seoul was 1.25 million KRW (Korea Real Estate Board).

Loan regulations completely blocked the 'dream of homeownership' for non-homeowners. An environment was created where only cash-rich buyers could purchase homes. Even those who won the lottery-like housing subscription gave up contracts due to loan restrictions.

The redevelopment site of Jinju, Miseong, and Clover Apartments as seen from Seoul Sky, the observation deck of Lotte World Tower in Songpa-gu, Seoul.

◆Yoon pledges supply expansion and deregulation... Full effort to stabilize the market= President-elect Yoon Seok-yeol is announcing a major reform of real estate policy, spearheaded by the twin pillars of 'supply expansion' and 'deregulation.'

This is based on a realistic diagnosis that the Moon Jae-in administration's real estate policy failed because it focused solely on suppressing demand by waging a 'war on speculation,' overusing regulations, and neglecting supply.

The flagship pledge is to supply more than 2.5 million housing units over five years. Among these, 1.3 to 1.5 million units will be supplied in the metropolitan area where demand is concentrated. Regulations related to reconstruction and redevelopment projects will also be eased. President-elect Yoon pledged to ease regulations on reconstruction, redevelopment, and remodeling to ensure sufficient housing supply in high-demand urban areas such as Seoul.

He also announced a major overhaul of the tax system, including the long-term abolition of the comprehensive real estate tax (종부세). The plan is to eventually integrate the 종부세 with property tax. Amendments and improvements to the three lease laws are also expected.

However, many policies require the enactment or revision of related laws. Cooperation and consent from the major opposition party are essential. An industry insider said, "Tax reform and the three lease laws require the Democratic Party's consent, so realization in the short term may be difficult," adding, "Focusing first on common pledges with the Democratic Party, such as deregulation of redevelopment and reconstruction and easing loan restrictions for first-time homebuyers, would be an effective approach."

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