[비즈한국] July 23, the KBS Annex in Yeouido. The scheduled 100 minutes stretched into 193 minutes. During the "National Grand Debate on Real Estate Policy," which lasted over three hours, 28 questions and tasks were raised. This number itself is a message. It means that the government does not yet have all the answers, and at the same time, it signals a determination to address these issues head-on.
The debate has ended, and reviews abound. Now, the market’s focus is on the comprehensive measures announced for late July, or early August at the latest. What will be included? And what should we prepare for? Let us examine the signals that emerged from the debate in order.
1. What is Certain—The Direction is Set, Only the Intensity Remains
The President stated, "The public generally agrees that property ownership taxes should be strengthened." He added that the remaining questions are "to what extent will they be strengthened, and what kind of differentiation will be applied?" This means the direction has been decided; only the level of intensity remains.
Another remark deserves closer attention: the diagnosis of the "one smart home" phenomenon. Regarding this, the President said, "It has created an opportunity for the most efficient speculation," and "Because there was no distinction between residential and investment purposes, a massive issue unfolded from a very small hole."
This statement is important for a reason. It is because the highest decision-maker on policy officially acknowledged in a public forum that the "one smart home" phenomenon, which has dominated the market for the past few years, is a structure created by policy rather than the greed of market participants. If you heavily tax multiple home ownership, assets converge into one home. Since it is advantageous to have a more expensive home, people congregate in the most expensive areas. Gangnam rises, Mapo and Seongdong follow, and Nowon and Seongbuk keep pace. Regulations have never reduced the total volume of demand; they have only changed the order of those waiting in line.
If so, the direction of the solution becomes clear. It is about "value," not the "number" of homes. In fact, at the ministry discussion on tax policy, a plan was discussed to shift the Comprehensive Real Estate Tax (Jongbu-se) assessment criteria from the number of homes owned to the total aggregate value. A plan to differentiate ownership and capital gains taxes based on actual residency is also on the table. This is what has been confirmed so far.
2. What is Expected—A Three-Track Approach: Taxation, Finance, and Supply
First, taxation. Likely measures include adjustments to Comprehensive Real Estate Tax rates and tax bracket thresholds, an increase in the official market price ratio, restructuring the special long-term holding deduction for one-home households to focus on actual residency, and reducing benefits for non-residential homes. Among these, the official market price ratio is a matter for enforcement decrees and does not require parliamentary approval. The others require legislative amendments.
Second, finance. The plan to restrict jeonse loan guarantees for non-resident single-home owners appears to be shifting toward a "pinpoint" approach that limits these restrictions to cases of "clear speculation" rather than a blanket application. On the other side, there are demands to ease loan regulations for young people and homeless households. This was the most frequent sentiment among the approximately 4,800 opinions collected during the preliminary phase.
Third, supply. Professor Jin Mi-yoon of Myongji University, who delivered the keynote presentation, pointed out that "the most concerning issue is not a temporary decrease in supply, but the fact that the supply chain itself is breaking," noting that housing starts in the Seoul metropolitan area have halved compared to the past. Key tasks identified include restoring the pipeline from permitting to construction, completion, and move-in; resolving bottlenecks in urban renewal projects; and recovering the supply of non-apartment housing, which plummeted following the jeonse fraud crisis.
3. The Time Lag You Must Not Miss
I must highlight the most important practical point here: the timeframes for taxation and finance are different.
Tax law amendments must pass through the National Assembly and will mostly take effect after next year. In contrast, financial regulations take effect immediately through supervisory regulations and administrative guidance. What shakes the short-term market is not taxes, but loans. If you interpret the immediate price reactions following the announcement as the effect of tax policy, you will misread the situation.
Moreover, the measures will not end with a single announcement. The government plans to release tax reforms first, followed sequentially by supply and financial measures. Just because something is absent from the first announcement does not mean it is not coming.
Therefore, when reading the announcement, I recommend categorizing each item into three: First, items that take effect immediately through enforcement decrees and administrative guidance. Second, items that require legislative amendments. Third, items where only the direction is set and details are deferred. Short-term market shocks will only come from the first category, structural changes to assets will come from the second, and the third is a teaser for the next round. If you mix these three up, you will either overreact or under-respond.
4. The Market is Already Providing the Answer
As of the third week of July (July 20), Seoul apartment sale prices rose 0.27%, marking 75 consecutive weeks of growth. The rate of increase itself slowed slightly from the previous week's 0.30%. This is common knowledge.
What we really need to look at is the jeonse market. In the same week, Seoul apartment jeonse prices also rose by 0.27%. Looking at the cumulative data for this year, sales prices are up 5.74% and jeonse prices are up 5.72%, with the two indicators moving in near lockstep. Jeonse is a market of pure utility value where there is no room for speculative demand. The fact that jeonse prices are rising at the same pace as sales prices means that the current rise in Seoul is less of a speculative bubble and more of a signal that there is a genuine lack of living space. Jeonse prices do not lie.
The pre-sale market is telling the same story. The Korea Housing Institute’s Seoul apartment pre-sale outlook index jumped from 100.0 in May/June to 114.3 in July. In April, a complex in Seocho-dong saw a first-tier general supply competition ratio of 1,099 to 1. The fact that pre-sale competition ratios are rising in a market piled with regulations is a sign that new supply has become increasingly scarce. It is not that demand has disappeared, but that the path has narrowed.
On the other hand, regional apartment prices have turned stagnant. Daegu, Gyeongbuk, Chungnam, and Jeju saw declines. The entire nation is not overheating. If this disparity is treated with a single set of measures, Seoul will not be reined in while the provinces will merely freeze. The fact that the increase rate in Dongtan, Hwaseong, fell from 0.73% to 0.25% after being designated a regulated area shows the effectiveness of regulations, but a complete interpretation requires looking at where that demand went.
Of course, counterarguments are worth listening to. The points that our effective property tax rate is lower than in major countries and that asset inequality has deepened, as well as the logic of fairness in taxing unearned income, are legitimate in themselves. As the opposition party is preparing alternatives to cut taxes for up to three-home owners, the final version may change during the parliamentary discussion process. The announced plan is not necessarily the final implementation plan.
5. So, How Should We Cope?
For homeless households who are genuine buyers: Expect easing of loan regulations. However, since the expansion of land transaction permit zones has blocked the "buy with jeonse" method, jeonse supply has decreased and conversion to monthly rent (wolse) is accelerating. The cost of waiting is higher than before. It is better to move toward a parallel strategy rather than choosing between pre-sale subscription and buying.
For one-home resident owners: This is the safest position in these measures. However, since all discussions are being reshaped around "actual residency," managing your residence history is essentially saving on taxes. It is not too late to move after confirming the final form of the special long-term holding deduction reform.
For one-home non-resident owners: Frankly speaking, this is the most vulnerable position in the current climate. You are being targeted by both tax policy (reduction of non-residency benefits) and finance (restrictions on jeonse loan guarantees). It is better to decide before the announcement whether to switch to actual residency or to divest.
For multi-home owners: There is a paradoxical point here. If the tax base shifts from the "number" of homes to "value," the relative disadvantage of owning several mid-to-low-priced homes will decrease, while the premium enjoyed by one super-expensive home will shrink. You need to recalculate your portfolio based on aggregate value, not the number of properties.
6. The Remaining Question
Regarding reconstruction and redevelopment, the President said, "While residential environments improve, many existing residents have to leave, and the total number of households actually decreases." That is an accurate point. However, it is also a fact admitted by the President himself that it is difficult to find new land for development within Seoul. If urban renewal is not the answer, where will Seoul's supply come from? Whether the answer to this question is contained in this comprehensive package will determine its success or failure.
Taxes change the map. What ultimately changes the market is supply. If the 193-minute debate served to reaffirm that fact, it had meaning in itself.