Cheong Wa Dae said the likelihood of a sharp rise in housing prices following the end of the capital gains tax moratorium for multiple-home owners is low. On the direction of tax rationalization, it added, "We are reviewing differentiated approaches by type, including multiple-home owners, non-resident single-home owners, and ultra-luxury homes."
Kim Yong-beom, Chief of the Presidential Policy Office, held a briefing at Chunchugwan on Wednesday, forecasting that after the capital gains tax moratorium for multiple-home owners ends on the 9th, housing prices "will not rise to a level that warrants concern." Kim noted that since January 23, when President Lee Jae-myung first announced the end of the tax moratorium for multiple-home owners, listings have increased significantly and prices have declined, centered on Seoul's three Gangnam districts and Yongsan-gu. He emphasized this as "a positive pattern from the perspective of easing asset inequality." He added, "I expect prices in Gangnam, which had been suppressed, to rise moderately as the area returns to its own track."
Kim made clear that it is difficult to simply compare the current situation with the case of listings declining after the Moon Jae-in administration's implementation of the capital gains tax surcharge for multiple-home owners in 2021. "We will not see the 2021 pattern," he said. "Unlike back then, we now have two strong measures in place, the June 27 measures and the October 15 measures."
On the direction of property tax reform, he said, "President Lee has presented standards on how housing-related taxes should be structured," reaffirming that differentiated treatment will be applied by type, including multiple-home owners, non-resident single-home owners, and ultra-luxury homes. He added, "Relevant ministries and research organizations are reviewing various alternatives."
"The basic principle is that housing and land should be used according to their original purpose," he said. "President Lee has stated on multiple occasions that he will not tolerate unearned income through real estate. We are reviewing the overall system in this direction."
On a bill submitted by the ruling bloc to abolish the special long-term holding deduction for capital gains tax, he drew a line, saying, "This is absolutely not the government's position." Kim said, "The long-term holding deduction itself will of course be maintained. However, since residency and ownership are both currently granted a 40 percent deduction, there is a need to consider whether this is appropriate for restructuring the housing market around actual residents." This is interpreted as a plan to restructure the deduction rate—currently applied up to 40 percent each for holding period and residency period, combined up to 80 percent—around the residency period. He also stressed, "We will do our best to ensure there is no problem protecting actual-resident single-home owners."
Cheong Wa Dae also made clear its position that supply plans will proceed as scheduled. "We are working to implement the 60,000 units announced in the previous January 29 measures without delay," Kim said. "We will ensure that supply proceeds according to the announced schedule so that the public does not engage in 'panic buying' out of anxiety." The government previously presented the Yongsan International Business District, Taereung Country Club, and the Gwacheon racetrack site as core supply locations through the January 29 measures.
Kim analyzed that the mismatch between supply and demand has deepened as high interest rates and real estate project financing (PF) issues overlapped in 2022-2023. "Housing starts in 2022-2023 fell to 100,000 units, about half of the 180,000-unit average of the past five years, significantly reducing housing supply that should be completed in 2026-2027," he said. "The mismatch occurred as the macroeconomy improved from last year and overall demand picked up."
Meanwhile, as the end of the capital gains tax moratorium approaches, the Seoul apartment market is showing signs of rebounding again. Seoul apartment listings peaked at 80,080 on March 21 before declining rapidly to 70,897 as of Wednesday, a drop of about 10,000 units, or 11.5 percent. According to the Korea Real Estate Board's weekly trend for the fourth week of April (as of the 27th), the rate of increase in Seoul apartment sales prices reached 0.14 percent, nearly triple the mid-March low of 0.05 percent.
The jeonse and monthly rental market is also unsettled. Seoul apartment jeonse listings currently stand at 15,403, less than half the 30,750 of two years ago. In outlying areas such as Nowon-gu (-88.5 percent), Jungnang-gu (-88.0 percent), and Gangbuk-gu (-83.5 percent), jeonse listings have effectively run dry, and jeonse prices are continuing to rise at a weekly rate of 0.20 percent. Concerns are emerging that as the jeonse shortage intensifies, tenants may turn to purchases, adding further upward pressure on home prices.
