[비즈한국] Reports suggest the government is in the midst of reviewing an increase in the comprehensive real estate tax (Jongbu-se) fair market value ratio from 60% to 80%. The reality is unfolding that the president's claim that he "would not stabilize the real estate market through taxes" was a lie.
We have already witnessed such scenes countless times. At the beginning of his term, the Moon Jae-in administration claimed, "We will not control housing prices with taxes," but ultimately poured out 26 sets of real estate measures and raised the top marginal rate of the comprehensive real estate tax to 6%. The Yoon Suk-yeol administration touted "easing tax regulations," but turned to tightening them once housing prices rose. The Lee Jae-myung administration is following the exact same path.
A Vicious Cycle of 20 Years of Failed Policy
Looking at the real estate policies of past administrations, a vicious cycle continues where the exact opposite policies are repeated whenever the government changes. The Kim Dae-jung administration implemented deregulation policies to overcome the IMF crisis, while the Roh Moo-hyun administration turned to the introduction of the comprehensive real estate tax and strict regulations. The Lee Myung-bak administration returned to deregulation, the Park Geun-hye administration took lukewarm measures, and the Moon Jae-in administration shifted back to powerful regulations. The Yoon Suk-yeol administration is turning to easing, and the Lee Jae-myung administration is returning to strengthening.
The real victims of this pattern of policy shifts are actual end-users and the general public. While politicians package these as "policies for the working class" during every election, in reality, they only heighten uncertainty in the real estate market and impose greater burdens on those who truly need homes. 84.6% of those who benefited from the easing of the comprehensive real estate tax were owners of three or more homes; the beneficiaries of tax policy changes have always been the high-income bracket and multi-home owners.
The Real Cause of Panic Buying is Policy Distrust
Currently, a "panic buying" phenomenon is appearing again, centered around Seoul. The Bank of Korea warned that the housing market risk index is at its highest level in three years, and the housing price outlook index has soared to a level similar to the panic buying era of 2021. What is the root cause of this phenomenon? It is the public's deep-seated distrust of government policy.
The public has already learned. They know that when politicians say they "will not use taxes to catch housing prices," a tax bomb will soon explode, and when they shout about "increasing supply," regulations will soon be strengthened. This distrust makes rational market judgment impossible and is a major cause fueling irrational buying (panic buying) driven by fear.
The fact that housing prices skyrocketed nearly twofold during the Moon Jae-in administration, and that they have started to rise again under the Yoon Suk-yeol administration, all stem from a lack of policy consistency and credibility. Politicians use real estate policy as a tool for their own political survival, and the public bears the brunt of the damage.
The Limits and Reality of Tax Response Strategies
In such a situation, what response measures can real estate owners take? Experts suggest various tax-saving strategies. Representative examples include tax savings through long-term ownership, benefits through registering as a rental business operator, and distributing assets among family members. However, even these strategies are powerless in the face of the government’s policy changes.
The general public is trapped in a structure where they have no choice but to bear the increased tax burden in a situation where policy changes cannot be predicted. Even with professional help, if policies change overnight, all preparations become useless.
Ultimately, it is the middle class and the working class that take the direct hit from increased tax burdens. Even actual residents who own one home become targets of the comprehensive real estate tax due to the rise in official assessed prices, and not all multi-home owners are wealthy. In many cases, they simply possess one additional home they worked hard to acquire for retirement or their children's education, yet they are branded as "speculative forces."
The Economic Cost of Policy Inconsistency
Policy inconsistency is not merely an individual problem; it increases the economic costs for the entire nation. Companies delay investments or move overseas in an uncertain policy environment, and individuals become buried in short-term responses dependent on political variables rather than rational economic judgment.
In the real estate market, this phenomenon is even more serious. Unpredictable changes in tax policy harm market efficiency and lead to distortions in resource allocation. As the "uncertainty premium" of needing to predict policy changes is reflected in real estate prices, all costs are eventually passed on to consumers.
An even more serious problem is that as the credibility of policy collapses, the normal market mechanism itself fails to function. Rather than price determination by supply and demand, speculative trading based on political variables and predictions of policy changes is increasing. This is a grave problem that undermines the foundation of a sound market economy.
What should we do in the face of this desperate reality? First, we must accurately recognize the real estate policy pledges of politicians. We must no longer be deceived by sweet talk like "policies for the working class" and "housing price stabilization" repeated every election.
We must raise our voices to demand policy consistency and credibility. We must keep politicians in check so they cannot change policies arbitrarily, and hold them accountable when they do. We must spread the perception that real estate policy is not a political tool but a critical issue directly linked to the lives of the people.
Personally, one must establish a long-term asset management strategy that is not swayed by policy changes. It is more important to build a robust financial structure that remains unshaken even when policies change, rather than seeking short-term tax avoidance. Above all, speculative transactions relying on political variables should be avoided.
The Need for Political Neutralization of Real Estate Policy
Ultimately, the fundamental solution to all these problems is the political neutralization of real estate policy. No problem can be solved under the current system, where policies flip 180 degrees whenever the government changes. Real estate policy should be established by an independent expert organization from a long-term perspective, and a system must be built that minimizes political intervention.
Furthermore, institutional devices are needed to increase the predictability of tax policy and prevent radical changes. When tax laws are amended, there should be a certain grace period, retroactive application should be prohibited, and significant changes should go through a process of social consensus such as a referendum or public hearing.
The transparency of the real estate market must also be significantly increased. By disclosing actual transaction prices, securing transparency in the calculation of official assessed prices, and releasing accurate data on policy effects, policy discussions should be based on objective facts rather than political packaging.
Politicians' real estate policies are merely tools to secure votes from the public, and the true solution must be created by us. It is time to stop being deceived by their lies and become awakened citizens who take responsibility for our own future.
Kim Hak-ryul, head of the Smart Tube Real Estate Research Institute, known by his pen name "Pashong," previously served as a team leader at the Korea Gallup Real Estate Research Division. He operates and hosts the Naver blog "Pashong's World Exploration" and the YouTube channel "Stue TV." He is the author of books including "The Power of Gyeonggi-do Real Estate (2024)," "The Absolute Principles of Seoul Real Estate (2023)," "The Future of Incheon Real Estate (2022)," "Kim Hak-ryul's Absolute Principles of Real Estate Investment (2022)," "The Future Map of South Korean Real Estate (2021)," "From Now On, Only Places That Will Rise, Rise (2020)," and "South Korean Real Estate User Manual (2020)."