[비즈한국] On July 23, a grand public debate on real estate policy, presided over by the President, will be held. The political sphere is already heated even before the event begins. The opposition party calls it a "predetermined-conclusion debate," while the ruling party fires back, asking, "Are you afraid of the collective intelligence of the people?" However, watching this squabble, I have a different worry. Before arguing over whether the conclusions are predetermined or not, I fear the questions themselves are framed incorrectly.
Let’s look at the six topics the President disclosed via social media: appropriate levels of property ownership taxes; differential taxation between a single primary residence and non-residential/multi-home ownership; the scale of such differentiation; separate treatment for ultra-high-value primary residences; threshold standards for ultra-high-value homes; the relationship between ownership and transaction taxes; and the use of ownership tax revenue. Disclosing these topics in advance and seeking public input is worthy of praise. It is a significant step forward from the past, when measures were crafted behind closed doors and announced suddenly.
However, looking at the six questions side-by-side, one commonality emerges: they are all about taxes. How much to collect, whom to collect more from, and where to spend the collected money. The framing of the questions is set entirely on "taxation" from the start. No matter how elaborately these questions are answered, the answers will not address what the public truly wants to know. The public's question is simple: "When, where, and how many homes will be available for me to live in?"
Taxes are levied on the results of the market, not the cause of the market. Prices are determined at the point where supply and demand meet. While tax and loan regulations can temporarily change the "form" of demand, they cannot change a single bit of the "structure" where there are not enough homes to live in where people want to live. A policy that sends bills for the results while ignoring the causes will eventually lose to the market, no matter how sophisticatedly it is designed.
There is no history of curbing home prices with taxes
As someone who has tracked the real estate market with data for over 20 years, I can assert one thing: there has never been a single instance in the history of South Korean real estate where taxes and regulations succeeded in curbing home prices. The Roh Moo-hyun administration introduced the Comprehensive Real Estate Holding Tax and imposed heavy capital gains taxes, but Seoul home prices skyrocketed during its term. The Moon Jae-in administration tightened ownership taxes, transaction taxes, and loans across the board through some 20 rounds of measures, but the results are what we know. Conversely, when were home prices stable? In the early to mid-2010s, when large-scale move-ins occurred in places like Bogeumjari housing, Wirye, and Misa. The market stabilized not because tax rates were low, but because the supply volume was high.
The mechanism by which demand-suppression policies fail is clear. The government expects multi-home owners to sell their homes if ownership taxes are raised, but if transaction (capital gains) taxes are heavy, owners choose to hold onto their properties to avoid the tax bomb upon selling. Listings dry up, and the burden of ownership taxes is passed on to jeonse and monthly rent. In the end, the tenant—the very homeless commoner the policy is meant to protect—receives the final bill. Moreover, the stronger the regulations, the more people dispose of multiple properties to switch to one "high-quality" home. The "fixation on one smart home" that the government takes issue with is not created by market greed, but is the result of a rational choice designed by regulation. Whack-a-mole: when you hit a mole, it doesn't disappear; it just pops up in another hole. Didn't we clearly witness the balloon effect—where demand shifted to non-regulated areas whenever a regulated area was designated—within just the last year?
The real crisis is not tax bills, but a cliff in move-in volume
The real ticking time bomb in the market right now is not tax bills. It is the move-in volume graph. While there are variances depending on the criteria, private research agencies all point in one direction. It is widely expected that Seoul apartment move-in volume will drop from 30,000–40,000 units in 2025 to half that level in 2026, and down to around 10,000 units by 2027. Although the specific numbers differ by statistical agency depending on whether rentals are included, under any criteria, Seoul is heading toward the worst supply cliff in the last 10 years between 2026 and 2027.
Housing is not instant noodles. Even if a permit is issued today, it takes over five years until residents can move in. The supply cliff currently in front of us was a pre-ordained future from years ago, and what we do now will determine the market of the early 2030s. At a time when unions and builders are in conflict everywhere due to soaring construction costs, and builders are canceling new projects due to PF insolvency, it is leisurely for the government to debate international comparison tables of effective ownership tax rates at a forum. Raising taxes in a market rising due to a shortage of homes is like handing a bill instead of antipyretics to a patient with a fever.
Loan regulations are no different. Since the 6/27 measures last year, mortgage loan limits have been continuously tightened, and in July this year, so-called "triple regulations" were added by designating Dongtan, Giheung, Guri, and Gwangju as regulated areas. What was the result? The cash-rich were unaffected, while those who truly needed loans—such as young people entering the workforce, newlyweds, and those looking to move—were blocked from entering the market. Loan regulation is not a policy to curb home prices, but a policy that reshuffles "who can buy a home" based on cash holdings. And every time a regulated area was designated, demand didn't die but moved to the next town over. We are seeing the scene of prices in non-regulated areas jumping up right next to where the hand of regulation pressed down in real-time throughout the first half of this year.
The international comparisons the government presents as grounds for raising ownership taxes are also half-truths. It is true that South Korea's effective ownership tax rate is lower than the OECD average. However, South Korea has the highest tax burden in the world at the transaction stage—namely, acquisition and capital gains taxes. Countries with high ownership taxes generally have light transaction taxes. Picking only one tax category to compare with the international average and saying, "Ours is low, so we must raise it," is a statistical illusion that hides the total tax burden. Based on the total burden, South Korea's share of housing-related tax revenue is already among the highest in the OECD.
Jeonse prices are already providing the answer. There is no speculative demand in jeonse. Jeonse prices are the most honest market indicator, reflecting only actual demand—the supply and demand of "people who want to live in that area right now" and "homes available in that area right now." The steady rise in jeonse prices in major Seoul areas is the market's scream that there is a shortage of volume relative to real demand, not because of speculators. When jeonse prices rise, the gap with purchase prices narrows, and this narrowed gap stimulates purchase demand again. The starting point of this vicious cycle is always a shortage of volume.
Three real agendas the Grand Debate must address
Therefore, I have a request for the Grand Debate on the 23rd. Please put the following three items on the table instead of the six tax-related questions.
First, sales volume. We must get listings out into the market. We need to first resolve the structure where multi-home owners and non-resident homeowners cannot sell even if they want to because of heavy capital gains taxes. If you want to raise ownership taxes, you must at least clearly provide an exit route, i.e., transaction taxes, even if only temporarily. We have already paid expensive tuition to learn that if you block the way to sell while only raising the burden of holding, the market responds with listing freezes and the passing on of costs to jeonse and monthly rent.
Second, jeonse and monthly rental volume. Over 80% of rental housing in our country is supplied not by the public sector, but by private multi-home owners. If you define multi-home owners only as speculators and kick them out of the market, the jeonse and monthly rental volume they supplied will disappear as well. Does the public sector have the fiscal capacity to fill that void? If not, it is far more realistic to restore and refine the registered rental business system to grant obligations and incentives to private rental suppliers. We need to bring the positive function of "rental housing suppliers" into the system.
Third, the supply pipeline. An implementation plan to advance the move-in dates for the 3rd-generation new towns, process management and financial support to promote construction starts at Seoul urban renewal sites stalled due to construction cost conflicts, and a roadmap to clear bottlenecks in urban renewal projects like the Reconstruction Excess Profit Recovery System and safety evaluations. These are the agendas the President should oversee directly. There is practically no way to get new apartments in Seoul other than redevelopment and reconstruction. A policy mix that binds the "building hands" while only strengthening the "pressing hands" will result in a much larger bill returning in five years.
In addition, I hope this debate will not be trapped in the narrow lens of "ultra-high-end apartments in Seoul." While the 25 billion won transaction in Hannam-dong makes the news, unsold inventory is piling up in provincial areas, and an increasing number of homes are unable to find owners even after completion. If we apply the same nationwide tax and loan regulation standards to a market where overheating and stagnation coexist within the same country, we will end up failing to curb Seoul while killing the provinces.
Policy should be designed precisely according to regional supply and demand, not averages. And at the center of all these discussions must be the 2030 generation. It is an era where one has to save for nearly 9 years without spending a single penny of income to buy a home in the metropolitan area. What they need is not the catharsis of punishing multi-home owners, but housing complexes to apply for, move-in volume, and an affordable loan ladder.
If you are putting the public in the driver's seat, fix the destination first
The ruling party said regarding this debate that it would move the public from the audience to the driver's seat. That is a fine sentiment. However, if you sit them in the driver's seat but the navigation destination is set to "tax revenue procurement," the public will simply end up driving to a place they did not want to go. The destination must be clear: increasing the volume that citizens can choose from in all three markets—sales, jeonse, and monthly rent. That is the only verified path to stable home prices.
I am not opposing the discussion of tax rationalization itself. It is right to fix the irrationality where excessive deductions are applied to ultra-high-end homes that are not even occupied. However, it is a matter of order and priority. Taxes cannot and should not be the "lead actor" of market stability. The lead actor is always supply. I hope that on the 23rd, the graph of move-in volume for 2027 is projected on the screen in the Blue House debate hall before the numbers for effective ownership tax rates. Because what the public is curious about is not next year's tax bill, but when the home their child will live in will be built.