An apartment complex undergoes redevelopment in Seocho District, southern Seoul, on July 23.YONHAP
President Lee Jae Myung on Thursday signaled a potential revision to the property tax scheme to discourage homeowners from holding a single high-value home solely for financial gain.
Presiding over a public forum on housing policy in Yeongdeungpo District, western Seoul, the president appeared critical of the growing public preference for concentrating wealth in a single high-value property.
The trend emerged under policies designed to benefit owners of a single home, with buyers opting for properties in high-value areas with the primary motive of making money from real estate.
"The intention of policymakers at the time was to protect households that own just one home," Lee said, referring to a capital gains policy that imposes a heavy tax on sales of homes by owners with multiple properties, while single-home owners were subject to a lower rate.
"But because there was no distinction between homes for residence and those for investment, expensive and inexpensive homes were treated equally. It, in turn, created a loophole that allowed people to buy one highly valuable home and reap speculative gains."
Lee said luxury homes that derive their value from features such as Han River views or geographic scarcity should be allowed to trade at market prices determined by legitimate supply and demand.
"But when abnormal factors drive prices, they should be normalized by requiring owners to bear a corresponding social burden through measures such as taxation," the president said. "Korea's real estate market is under such intense pressure that even a tiny loophole can cause it to burst."
President Lee Jae Myung, right, listens during a public forum on housing policy in western Seoul on July 23.JOINT PRESS CORPS
While he hinted at using tax policy as a means of curbing distortions in the real estate market, Lee rejected any outright attempts by the government to dictate housing prices.
"If the government sets a target price for housing and attempts to restrain or adjust supply and demand to achieve it, wouldn't that be closer to a socialist system?" the president said. "That is neither feasible in an advanced economy like Korea, nor can price controls that disregard market principles altogether serve as a policy goal."
The president also pointed to excessive jeonse (lump-sum deposit) loans and public guarantee programs as key factors behind soaring housing prices.
"Under the guise of helping ordinary people, jeonse loans were made available with virtually no limits, and it allowed deposits to climb to 60 to 70 percent of a home's value," Lee said. "Excessive lending and financial guarantees then drove housing prices even higher. That became the breeding ground for zero-capital investment, where buyers acquired hundreds of homes with little or none of their own money before absconding with tenants' deposits.”
Multiple apartment complexes are seen in southern Seoul on July 23.NEWS1
He said structural reforms, including tightening jeonse loan controls and downsizing guarantee ratios, would therefore be unavoidable.
"Support should be narrowly tailored to those with genuine housing needs, including low-income earners without homes, young people, newlyweds and first-time jeonse loan borrowers, with assistance tailored to their specific circumstances," Lee said. "That's the only way to ensure fairness."
Lee also warned against viewing real estate as the only way to build wealth, and underscored the necessity of pre-emptive actions.
"If everyone borrows money to buy homes, and the value of land in a single city reaches a level where it could buy another country, we will eventually face a serious problem," he said.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
