Won Hee-ryong "Next Year's Officially Announced Price Realization Rate Adjusted to 2020 Level"

Measures to Alleviate Holding Burden to Prevent Reversal Between Official Price and Market Price

[Image source=Yonhap News]

[Asia Economy Reporter Kim Min-young] Won Hee-ryong, Minister of Land, Infrastructure and Transport, announced, "We will lower the 2023 official property price realization rate to the 2020 level."

Minister Won held a briefing at the Seoul Government Complex on the 23rd and said, "To alleviate the burden on the public and prevent the recent reversal between official property prices and market prices, we have prepared a revised plan for the official price realization rate and measures to ease holding burdens through sufficient discussions among related ministries."

Minister Won pointed out that the official price realization plan established during the Moon Jae-in administration revealed several problems. He said, "The 'official price realization plan' established in November 2020 by the previous government exposed several issues within just two years of implementation," adding, "The rapid rise in housing prices due to the previous government's real estate policy failure and the steep increase in the realization rate worked together, resulting in a sharp increase in the public's holding burden."

He noted that the surge in housing prices led to an increase in official property prices, which in turn caused a sharp rise in the public's tax burden, leading to criticism that the comprehensive real estate tax has become a general tax on the public. Minister Won emphasized, "Property tax and comprehensive real estate tax imposed on houses increased significantly every year during the previous administration," and "Especially this year, the number of comprehensive real estate tax payers exceeded 1.3 million, about 8% of homeowners, increasing criticism that the comprehensive real estate tax has become a general tax on the public."

He also explained, "Separately, due to the recent sharp drop in real estate prices caused by interest rate hikes, a reversal problem has occurred where official property prices are higher than actual transaction prices, greatly reducing public acceptance of official prices calculated based on the existing excessive realization plan."

Accordingly, he announced that the official price realization rate will be lowered to the 2020 level, explaining, "Therefore, the average realization rate in 2023 will decrease from 72.7% to 69.0% for apartments, from 60.4% to 53.6% for detached houses, and from 74.7% to 65.5% for land."

In addition, the realization plan to be applied from 2024 onwards will be prepared in the second half of 2023 while continuously monitoring the real estate market situation and economic conditions.

He also revealed plans to further reduce the fair market value ratio applied to property tax next year, following its reduction to 45% this year. He said, "For property tax, the fair market value ratio for single homeowners, which was temporarily lowered to 45% this year, will be further eased to below 45% next year," and added, "Regarding the comprehensive real estate tax, we will actively work to ensure that the government’s reform plan announced in July passes the National Assembly as originally proposed."

Minister Won stated, "Along with the downward adjustment of the official price realization rate prepared this time, if the property tax fair market value ratio reduction and comprehensive real estate tax reform plan are amended, the public's holding burden will be lowered to the 2020 level as promised in the campaign pledge."

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