Extensions of mortgage loan maturities on apartments in the Seoul metropolitan area and regulated zones held by multi-home owners were fully suspended starting Monday. The move comes about two months after President Lee Jae-myung in February sharply criticized the situation, saying, "It is problematic to grant even financial benefits for acquiring multiple homes." As a result, extensions on 4.1 trillion won ($3 billion) in bullet-payment loans held by approximately 17,000 households will be blocked. While exceptions are recognized in unavoidable cases such as when tenants are in place, the government expects that multi-home owners cut off from funding will dump properties onto the market, which could lead to a decline in housing prices. On the 9th of next month, the moratorium on heavy capital gains tax for multi-home owners will also end.
The government, which lists "breaking free from the real estate speculation republic" as a core state task, is now turning its regulatory blade toward one-home owners. President Lee recently posted on X (formerly Twitter) that "achieving zero real estate speculation through normalization of taxation, finance, and regulation is entirely possible and must be done," attaching an article reporting that the government is reviewing stronger jeonse loan regulations for non-resident one-home owners. President Lee has stated the principle of protecting one home used for actual residence, while making it "more advantageous to sell than to hold" for one home owned for speculative or investment purposes.
The question is whether "speculative purposes" can be accurately identified among non-resident one-home owners. President Lee indicated that temporary non-residence due to unavoidable reasons would be excluded from regulation, but given the wide variety of circumstances difficult to classify as speculation — such as work, children's education, and caring for elderly parents — establishing clear criteria appears difficult. There is a possibility that genuine homebuyers could be wrongly branded as "speculators" and suffer disadvantages. There are also significant concerns that regulation of non-resident one-home owners could further accelerate the shift from jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) to monthly rent, amplifying housing insecurity for non-homeowning ordinary citizens.
Rooting out real estate speculation is a crucial task that must be accomplished for the sake of housing stability, resolving polarization, and boosting economic productivity. However, if the government pushes ahead with hasty regulations at breakneck speed while viewing all non-resident one-home owners as speculators, it could unintentionally produce outcomes that run counter to the policy's intent of protecting genuine homebuyers and stabilizing housing for ordinary citizens. Caution must be exercised with one-home owner regulations that could create innocent victims and fuel market instability. The government should heed the painful lessons of previous administrations: real estate policies driven solely by excessive regulation only distort markets and undermine policy credibility.
