Will ‘Moon Jae-in season two’ stabilize housing prices?

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Will ‘Moon Jae-in season two’ stabilize housing prices?

Published: 11 Feb. 2026, 00:04

Audio report: written by reporters, read by AI

Joo Jung-wan

The author is an editorial writer at the JoongAng Ilbo.

The government’s real estate policy appears to be moving toward what many describe as “Moon Jae-in season two.” The details differ, but the overall direction of comprehensive regulation closely resembles the approach of the previous administration. Including similar measures under the Roh Moo-hyun government two decades ago, this marks the third time a Democratic Party (DP) administration has relied heavily on regulatory intervention.

Property listings are posted on the window of a real estate agency in Seoul on Oct. 20, 2025. [NEWS1]

The policies are not identical. If the Moon government’s measures were considered relatively moderate, the current administration under President Lee Jae Myung is viewed as significantly more aggressive.

The strongest step so far has been a sweeping expansion of land transaction permit zones. The system was used selectively under Moon but never at this scale. In April 2020, then-Seoul Mayor Park Won-soon first designated parts of Jamsil, Samsung, Daechi and Cheongdam as restricted areas. Although officially a land transaction permit system, it effectively functioned as a housing transaction approval mechanism.

At the time, the restrictions were applied to selected neighborhoods rather than the entire city. The current administration, however, took a far broader approach under its Oct. 15, 2025, measures, designating all 25 districts of Seoul and 12 areas in southern Gyeonggi as permit zones. Homes with existing tenants cannot be freely bought or sold, effectively blocking transactions. Despite growing complaints, the government has refused to ease the policy, citing the need to curb gap investment.

The key question is whether the measures have achieved their intended goal of stabilizing housing prices. Official data suggest otherwise. According to the Korea Real Estate Board, Seoul home prices have continued to rise every week even after the expansion. At one point this year, the weekly increase exceeded 0.3 percent, a level previously considered a sign of overheating during the Moon administration.

Private data show an even clearer trend. According to KB Real Estate, weekly apartment prices in Seoul rose by more than 0.3 percent for three consecutive weeks beginning last month. The figures suggest that while transaction controls may temporarily suppress activity, their effect does not last.

The government is now preparing additional measures, this time focused on taxation. A campaign pledge not to use taxes to control housing prices appears to have been abandoned. The first step is the reinstatement of heavier capital gains taxes on owners of multiple homes. Starting May 10, sellers with multiple properties will face a tax burden of up to 82.5 percent on capital gains.

The policy is based on the view that profits from multiple-home ownership constitute unearned income that should be largely recaptured through taxation. The next logical step could be higher property holding taxes.

Raising capital gains taxes without adjusting holding taxes may reduce the already limited supply of homes on the market. Owners who do not sell pay no capital gains tax, giving them an incentive to wait for policy changes or a future easing of regulations. As a result, the market could face a growing shortage of listings.

There may be a temporary increase in supply during any grace period before higher taxes take effect, but such effects tend to disappear once the deadline passes.

Korea has experienced a similar policy cycle before. The measures announced on July 10, 2020, under the Moon administration strengthened tax burdens at every stage of property ownership, acquisition and sale. At the time, then Finance Minister Hong Nam-ki said the government would sharply increase taxes across the board while temporarily delaying the higher capital gains tax until June 2021 to encourage sales.
The outcome is widely remembered. Housing prices surged, and a phrase describing people who delayed buying homes in line with government signals only to be priced out by the sharp rise quickly entered common use.

According to the Korea Real Estate Board on Jan. 29, apartment prices in Seoul rose 0.31 percent this week, up from 0.29 percent the previous week and marking the third consecutive week of accelerating gains. The increase was the largest in 14 weeks, since a 0.50 percent rise recorded in the Oct. 20, 2025 survey following the government’s Oct. 15, 2025 measures. The photo shows apartment complexes in Seoul’s Nowon District. [NEWS1]

An old Aesop fable offers a useful analogy. In “The North Wind and the Sun,” the wind fails to make a traveler remove his coat despite blowing harder and harder, while the warmth of the sun succeeds. Korea’s housing market has twice shown that excessive regulation can produce unintended consequences and ultimately drive prices higher.

DP administrations have long emphasized engagement and flexibility in inter-Korean policy, often described as a “sunshine approach.” Their reliance on strict regulation in the housing market therefore appears inconsistent.

Stabilizing housing prices is a legitimate policy goal. But the legitimacy of the objective does not justify any means. Excessive intervention risks tightening pressure on ordinary households rather than easing their burden. The concern now is whether policies intended to help those without homes could instead repeat the unintended outcomes seen in the past.

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.