President Lee Jae-myung chaired a national discussion on real estate policy, identifying three main issues: property tax, jeonse loans, and supply regulations. While specific tax rates, loan criteria, and supply targets have not been finalized, the government is increasingly likely to focus on taxing high-value single-home owners, managing jeonse loans, and easing regulations on private redevelopment projects in future measures.
On July 23, President Lee led the discussion at the KBS annex in Yeouido, Seoul. The government had previously held listening sessions from July 14 to 16, covering housing supply, housing finance, and real estate taxation. The discussions and online public suggestions were consolidated for this presidential forum. The government plans to incorporate feedback from the forum into tax reform proposals and subsequent real estate measures, which are expected to be announced by the end of this month or early next month.
The focus of the forum leaned heavily toward taxation. President Lee remarked on the real estate market, stating, “It will eventually burst,” and emphasized the need to prepare, even at the cost of political repercussions. He noted that raising property taxes is something that “should have been done in the past.” This indicates a desire to alleviate excessive investment pressure on real estate through taxation and financial measures rather than artificially lowering housing prices.
A key point of discussion was how to differentiate between types of homeowners, including primary residents, non-residents, and high-value properties. President Lee mentioned various categories, such as owner-occupied homes, non-resident homes, multiple homeowners, and high-value single-home owners, suggesting that tax burdens should be based on typical single-home ownership, with potential relief for actual residents. He also proposed using the term “residential” instead of “actual residence,” arguing that homes temporarily vacated for reasons like job relocation or children's education should not be classified as speculative.
The necessity for property tax reform has emerged as a significant issue among experts. Professor Kang Seong-hoon from Hanyang University suggested that tax rates should be based on the total value of owned properties rather than the number of homes owned, to ensure fairness in taxation. Opinions diverged on taxing high-value single-home owners, with some advocating for limiting excessive benefits while others cautioned against taxing unrealized gains. Various thresholds for high-value properties were proposed, ranging from 3 billion to 5 billion won.
In the housing finance sector, the management of jeonse loans was a major topic. President Lee stated, “It seems time to make adjustments” regarding jeonse loans, which he noted are both a support policy for housing stability and a contributing factor to rising housing prices. Expert presentations also argued for stricter requirements on jeonse loans for actual demand and maintaining a regulatory stance on multiple homeowners and non-resident landlords.
However, the extent of loan regulation remains contentious. Among the 5,004 online public suggestions released by the government as of 8 p.m. on July 22, housing finance accounted for the largest share with 2,197 submissions, followed by housing supply with 1,530 and real estate taxation with 1,277. Opinions were divided on whether to ease loan regulations for first-time buyers and newlyweds or to maintain them due to concerns over rising housing prices.
In the supply sector, the challenge remains how to address existing bottlenecks rather than finding clear solutions. President Lee commented on housing supply, stating, “There is a clear limit to where and how.” The forum suggested increasing floor area ratios to stimulate private redevelopment and reconstruction, rationalizing public contribution obligations, and easing loan regulations to expand non-apartment supply.
Non-apartment and private rental supply also emerged as separate issues. Chae Sang-wook, CEO of Connected Ground, pointed out that the government’s supply plan lacks a roadmap for how much private rental housing will be supplied during its term, arguing that the financial support for private rentals has not been institutionalized, effectively undermining the existing supply system. He noted that relying solely on supply focused on sales cannot adequately address instability in the rental market.
Overall, this forum was more about identifying issues than reaching conclusions. Even if property taxes are strengthened, questions remain about the price thresholds, applicable tax rates, and how to protect actual residents. Similarly, adjustments to jeonse loans will require a balance between protecting actual demand and managing household debt. The effectiveness of supply measures will depend on whether regulatory easing translates into actual construction and occupancy.
* This article has been translated by AI.
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