A female looks at houses on the market at a real estate agency in Seoul on Aug. 18.NEWS1
A civil servant in her 30s set to marry in October 2027 was planning to buy an apartment near the Sejong Government Complex and rent an officetel for her fiancé near his job in Seoul — until the government's latest tax reform upended those plans.
On Aug. 3, the government added a rule to the mortgage interest repayment income deduction requiring that every member of the household actually live in the home the loan was used to buy. Under the previous rules, she could have claimed the deduction on the Sejong apartment even while her husband lived separately in Seoul for work; now, because he would not be residing there, the couple would no longer qualify.
"The government always says it wants to eliminate the marriage and childbirth penalty, but when you look at the policies it actually rolls out, young people end up getting hurt," she said.
Her frustration is shared by many prospective and newlywed couples across the country. The government has kept up a steady drumbeat of "we will rein in housing prices," including a real estate package announced on Aug. 13, but young couples say some of its own measures are working against the very people who are getting married or having children.
A prime example is the tax reform plan that lowered the tax-free deduction nonresident homeowners can claim on the comprehensive real estate tax, from 1.2 billion won ($861,000) to 900 million won — meaning owners who don't live in their own home now face a bigger tax bill.
A 38-year-old woman surnamed Lee, who lives in a jeonse rental near a workplace daycare center in Gangnam District, southern Seoul, so she can drop off her 4-year-old, recently put her Songpa District apartment, also in southern Seoul, up for sale over concerns about nonresident regulations. Jeonse is a unique Korean housing rental system in which tenants make a large lump-sum deposit that is fully returned at the end of the lease.
"There are many people who have no choice but to live in a jeonse rental because of their commute or their child's education, but it feels bitter that the government seems to treat all of them like speculators," she said.
A view of apartment and villa complexes in Seoul, seen from Songpa District, southern Seoul, on Aug. 7.YONHAP
The government has also rolled out low-interest loan programs for young people, intended to offset the way getting married or having children can push couples' combined income over the eligibility cutoff for housing subsidies they'd otherwise qualify for. But the programs haven't caught on. The Youth Future Home Loan (translated), for instance, which offers low-interest loans for purchasing non-apartment housing worth 400 million won or less, has been criticized as out of step with the stable housing environment young people actually want.
"A villa might be enough for two people right now, but once we have a child and are raising them, we'll be planning to move to an apartment — I'm worried that if I buy a villa without thinking it through, it could end up an albatross if it doesn't sell later," said 31-year-old office worker surnamed Choi who is set to marry next year.
He said he ended up securing an older apartment in Dobong District, northern Seoul, worth around 400 million won as a jeonse rental instead. "If the government wants to encourage young people to marry and have children, I wish it would think through policies that also account for the life stages that follow," Choi said.
Students line up to attend private academies in Nowon District, nothern Seoul, on June 18, 2024.KIM JONG-HO
Furthermore, some of the housing stability measures meant to encourage childbirth are running into turf divisions between government agencies. In 2024, the Presidential Committee on Ageing Society and Population Policy announced that families would get an extra chance at a special housing supply allocation after having a child, even if they had previously won one. But the following year, the government designated all of Seoul and 12 areas in Gyeonggi as speculation-overheated districts — a status that triggers tighter home-buying restrictions in areas where prices are rising too fast — excluding those areas from the program.
A 42-year-old man surnamed Kim and his wife had a child after the government's announcement, expecting to benefit from the extra allocation chance, but they haven't been able to use it.
"When the program was introduced, there were only four speculation-overheated districts in Seoul — Gangnam, Seocho, Songpa and Yongsan — so we thought we could just go somewhere else, but this hit us out of nowhere," Kim said.
There is also frustration over the Newborn Special Didimdol Loan, a low-interest mortgage for families with a newborn, after the government cut its limit from 500 million won to 400 million won last year. The cut was part of a broader move: in June of last year, the government said it would shrink total policy loan volume by 25 percent, trimming the newborn loan limit by 100 million won ($70,800) and cutting the Buttimok jeonse loan — a separate low-interest loan for renters — from 300 million won ($212,500) to 240 million won ($170,000).
"The Newborn Special Didimdol Loan was widely used among newlywed couples house-hunting because its eligibility criteria were clear and the income threshold — 130 million won — was low, so a lot of people are frustrated that the limit was suddenly cut," said a real estate agent in Gangseo District, western Seoul.
People consult bankers at a bank counter in Seoul on Aug. 14.YONHAP
The government is considering the concerns. It plans to gather public opinions on the real estate tax reform plan through legislative notice through Thursday, then submit a tax law revision bill to the National Assembly.
It has received numerous pieces of feedback about the increased tax burden of the new policies, with some calling for more exemptions for homeowners who don't live in their own home.
The government is also considering ways to increase housing supply, including building youth housing on part of Yongsan Park. Land, Infrastructure and Transport Minister Kim Yun-duk plans to meet Seoul Mayor Oh Se-hoon on Thursday to discuss ways to boost housing supply in Seoul, including use of Yongsan Park, a large public park under development in central Seoul, built on land that once housed the U.S. military's Yongsan Garrison before it was returned to Korea.
Experts note, however, that one-size-fits-all demand regulations can end up hurting young people and other first-time buyers. "Uniform regulations targeting nonresident single homeowners and owners of multiple homes are hitting real end users in the housing market, including the jeonse and wolse (monthly rent)rental markets and first-time buyers such as young people," said Lee Chang-moo, a professor of urban engineering at Hanyang University. "Flexible policies are needed, such as increasing housing supply by easing redevelopment and reconstruction regulations."
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.
