Government Delays Revision of Public Price Realization Roadmap... "Fundamental Reconsideration Needed"

The government stated that the roadmap for the actualization rate of publicly announced prices needs to be reconsidered from the perspectives of necessity and validity. In effect, the revision has been postponed.

On the 20th, a 'Public Hearing on the Plan to Realize the Actual Value of Real Estate Official Prices' is being held at the Seoul Gangnam Branch of the Korea Real Estate Board. / Photo by Noh Kyung-jo

On the 20th, Song Kyung-ho, Associate Research Fellow at the Korea Institute of Public Finance, said at the "Public Hearing on the Plan for Actualizing Real Estate Publicly Announced Prices" held at the Korea Real Estate Board Seoul Gangnam Branch, "Partial improvements such as lowering the target actualization rate within the current system cannot fundamentally resolve the structural problems of the actualization plan or the limitations in implementation conditions."

This is because separate measures are needed considering domestic and international economic conditions and alleviating the burden on the public. He also emphasized the recent sharp increase in household interest expenses and the reduced capacity for consumer spending. According to the Bank of Korea, mortgage loans increased sharply from 4.2 trillion KRW in the second quarter to 14.4 trillion KRW in the third quarter. Overall household loans decreased by 14.4 trillion KRW in the second quarter but increased by 10 trillion KRW in the third quarter.

Associate Research Fellow Song predicted, "This year, housing sale prices are expected to fall by 3.7%, and jeonse prices by 4.8%. Next year, sale prices are forecasted to decline by 2.0%, while jeonse prices are expected to rise by 2.0%." He added, "With persistent domestic and international uncertainties and a delayed timing of interest rate cuts, the downward trend in sale prices is likely to continue."

The government has been working on lowering the actualization rate of publicly announced prices to the 2020 level this year and revising the roadmap. This is in line with President Yoon Suk-yeol’s campaign pledge, aiming to revise the roadmap established by the Moon Jae-in administration and announce the standards to be applied from 2024 in the second half of this year.

Previously, the Moon administration had proposed an actualization plan to raise the publicly announced prices to about 90% of market prices by as late as 2035 (2030 for apartments). The government judged that this plan led to excessively steep increases in publicly announced prices and excessive tax burdens, prompting a revision.

Accordingly, it was expected at the public hearing that proposals would be made to lower the actualization rate target from 90% to 80% and extend the target achievement year to 2040. However, the outcome was that a "fundamental reconsideration is necessary," without even confirming whether to revise or abolish the actualization rate.

Publicly announced prices are an important indicator used as basic data for 67 administrative systems, including property tax, health insurance premiums, basic pensions, and land compensation. The publicly announced prices for apartments, multi-family housing, and other collective housing finalized in April this year fell by an average of 18.63% compared to last year, marking the largest drop ever. The Ministry of Land, Infrastructure and Transport plans to announce measures to be applied to next year’s publicly announced prices soon based on the results of the public hearing discussions.

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