[비즈한국] Following President Lee Jae-myung’s repeated messages regarding real estate, the possibility of raising property taxes in the upcoming tax reform at the end of this month—targeting multi-home owners and non-resident property owners in Seoul—is growing. Although the President has been issuing daily warnings about the real estate market, especially in Seoul, since taking office, real estate prices in the capital continue to trend upward.
In particular, despite the President rolling out various real estate policies while mentioning the "tears of blood of young people," both Seoul apartment purchase prices and jeonse (long-term deposit rental) prices are rising even faster, forcing young people who cannot find housing to leave Seoul and move to Gyeonggi Province. They want to live in Seoul, but they are relocating to Gyeonggi Province because they cannot withstand the skyrocketing real estate prices.
On July 10, President Lee posted on X (formerly Twitter) regarding a public real estate debate: “Wouldn’t it be helpful for national discussion if we announced the main issues in advance, such as appropriate property taxes, whether to differentiate between primary residences and non-residential or multi-home properties, how much of a difference is appropriate, whether to handle ultra-high-priced primary residences separately, what the threshold for ultra-high-priced homes subject to additional burdens should be, the relationship between property taxes and transaction taxes, and the intended use of property tax revenue?”
He made it clear that tax issues would be the main topic of discussion at the forums hosted by the Ministry of Land, Infrastructure and Transport, the Financial Services Commission, and the Ministry of Economy and Finance from the 14th to the 16th, followed by a debate on the 23rd that the President himself will attend. Previously, in February, President Lee pointed to the property tax issue, stating, "I ask those who feel pity for the tears of the hundreds of thousands of multi-home owners who want to earn unearned income through real estate speculation: do you not see the tears of blood of millions of young people who are giving up on marriage and childbirth because of the high housing costs caused by them?"
Reflecting the President’s intentions, government policy has recently been trending toward strengthening property taxes. In May of this year, the government ended the exemption from heavy taxation on capital gains for multi-home owners, effectively reviving the heavier tax rates. The upcoming tax reform at the end of July is expected to increase property tax burdens by reducing long-term holding special deductions for non-resident single-home owners and multi-home owners, as well as expanding property tax burdens for multi-home owners.
Although the government is putting the tax card, which it had been reluctant to use out of concern for voter sentiment before the local elections—especially in Seoul—on the table, young people are still unable to find homes in Seoul and are moving to Gyeonggi Province as Seoul real estate prices remain unchecked. According to the National Data Agency, 131,195 people moved from Seoul to Gyeonggi Province between January and May of this year, and among them, 64,267—nearly half—were from the 2030 generation. This is a 10.3% increase compared to the 58,263 people during the same period last year.
The number of people in the 2030 generation who left Seoul for Gyeonggi Province is the highest since 2021, when real estate prices skyrocketed. In 2021, toward the end of the Moon Jae-in administration's term, as real estate prices in Seoul surged despite various policies, the number of 2030s moving from Seoul to Gyeonggi Province from January to May 2021 spiked to 74,058. After dropping to 60,363 in 2022 (January-May period) and showing a downward trend, it is rising again this year as the Lee Jae-myung administration’s real estate policies have begun to take effect in earnest.
The migration of the 2030 generation living in Seoul to Gyeonggi Province is occurring because real estate prices have risen to unbearable levels this year. According to the Korea Real Estate Board, national apartment purchase prices rose by 1.22% between January and May of this year, while apartment prices in Seoul rose by 3.81%, more than triple that rate. The rise in jeonse prices for apartments in Seoul is also concerning. While national apartment jeonse prices rose by 1.93% this year, Seoul’s apartment jeonse prices have risen by 3.58%.
As such, housing purchase and jeonse prices in Seoul significantly exceed the national average. The average housing purchase price in Seoul was 1.001 billion won, more than double the national average of 438.3 million won. In contrast, the housing purchase price in Gyeonggi Province was 502.93 million won, about half the level of Seoul and only 64.63 million won higher than the national average. Furthermore, the average jeonse price in Seoul was 479.02 million won, double the national average of 224.48 million won. On the other hand, the jeonse price in Gyeonggi Province was 301.4 million won, 177.62 million won lower than in Seoul. For the 2030 generation unable to afford the rising real estate prices in Seoul, moving to the relatively cheaper Gyeonggi Province is effectively their best option.