Editorials
Housing policy offers tax threats but little on supply
As the Blue House warns a chip boom could reignite property speculation, critics say more housing supply, not higher taxes, is the real fix.
The Seoul skyline is seen from Namsan on June 8. The average presale price of a privately built 84-square-meter (904-square-foot) apartment in Seoul has surpassed 2.1 billion won ($1.38 million) over the past year for the first time, underscoring persistent concerns over housing affordability despite repeated government efforts to stabilize the property market.
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Kim Yong-beom, the Blue House’s chief presidential policy secretary, has argued that Korea should normalize real estate taxation, warning that the semiconductor boom could fuel another surge in housing prices. In a post on X — formerly Twitter — Saturday, he said rising bonuses, higher wages and export earnings returning to Korea could flow into property markets, making adjustments to property holding and capital gains taxes both necessary and appropriate. He also suggested that once investors believe profits will outweigh taxes, regulations alone will not curb speculation.
President Lee Jae Myung, who previously said he would not rely on taxes to stabilize housing prices, also signaled tougher property holding taxes during his first-anniversary news conference on June 8. The administration appears to believe Korea’s holding taxes remain too low to deter speculative demand.
The experts dispute that view, arguing that Korea’s property holding taxes are not unusually low by Organisation for Economic Co-operation and Development standards. Instead, the article contends that market distortions stem from demand-side regulations such as land transaction permit zones, tighter mortgage rules and stricter owner-occupancy requirements, coupled with an inadequate housing supply.
Although the government has pledged to begin construction on 1.35 million homes in the Seoul metropolitan area over five years under its Sept. 7 housing plan, visible progress has been limited while housing prices continue to rise.
Liquidity is also adding pressure. Semiconductor-related bonuses have pushed up apartment prices across southern Gyeonggi’s semiconductor belt. According to the Korea Real Estate Board, apartment prices in Dongtan District of Hwaseong rose 2.22 percent in the third week of June, bringing cumulative gains this year to 9.57 percent. Between January and April, 3.7 trillion won ($2.4 billion) from stock and bond sales was redirected into home purchases.
Meanwhile, housing permits, construction starts and completions have all declined. Nationwide apartment move-ins scheduled for this year are projected to be 39.5 percent below 2022 levels, while supply in the Seoul metropolitan area is expected to fall 46 percent. Home prices and jeonse (a Korean rental system based on a large refundable deposit rather than monthly rent) rents continue to climb, increasing anxiety among buyers.
Expanding housing supply, rather than imposing heavier taxes or tighter regulations, is the only lasting solution. Although President Lee has called for accelerating new construction, redevelopment and land development projects, concrete supply measures have yet to appear. Until they do, repeated warnings of higher taxes are unlikely to restore confidence in the housing market.
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.
