A visitor looks out over apartment complexes from Mount Nam in Seoul, Tuesday. Yonhap
With a temporary tax break for multi-home owners set to expire, attention is now turning to whether the Lee Jae Myung administration's real estate policies will be able to stabilize Korea's overheated housing market going forward, according to market analysts Wednesday.
The issue sits at the heart of the Lee administration's push to rein in soaring home prices as part of what it calls the "normalization" of the housing market. One of the key measures will take effect starting Saturday, when a temporary tax benefit expires, restoring steep capital gains taxes on owners of multiple properties.
The move could impose an effective tax rate of up to 82.5 percent on home sales, depending on the number of properties owned — a sharp increase from the current 6 to 45 percent range.
In principle, sellers must complete contracts and payments ahead of the Saturday deadline to avoid the tax hike, though the government has introduced limited grace periods for transactions already in process.
While government officials insist that ending the capital gains tax exemption would encourage multi-home owners to sell and increase supply, many in the market are bracing for a different outcome.
"Those who intended to sell have already done so before the deadline," said Kwon Dae-jung, a real estate professor at Hansung University. "Logically, few would be willing to sell when they face tax rates of more than 80 percent. Some may even withdraw listings, while many others are likely to hold or transfer them to family members instead."
As a result, the number of homes up for sale is likely to shrink further, he said, potentially adding upward pressure on home prices in the greater Seoul area.
Kim Je-kyung, chief consultant at real estate agency Tumi, echoed the view.
"Transaction volume will likely slow and the reduced supply may add price pressure," he said. "After multiple administrations' failed housing policies, many multi-home owners have come to believe that no government policy can beat the market, leading them to adopt a wait-and-see approach," he added. "At this point, tax policies targeting multi-home owners alone are no longer enough to resolve the overheating in the housing market."
Source: Korea Times News
