▲AI PRISM* Customized Economic Briefing
*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an artificial intelligence (AI)-based customized news recommendation and summarization service developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.
[Key Issue Briefing]
■ Mortgage Freeze: With KB Kookmin Bank abruptly limiting mortgage loan ceilings to 300 million won and Shinhan Bank effectively cutting 50 million won by suspending MCG and MCI, buying a home in Seoul now requires 1 billion won in equity, based on the average Seoul apartment sale price of 1.3 billion won. Professor Lee Chang-moo of Hanyang University points out that while the function of a mortgage is to provide young people the opportunity to buy homes based on their stable future income, the housing ladder is being severed.
■ Balloon Effect Spreads: Although Hwaseong Dongtan, Yongin Giheung, and Guri were designated as regulated areas, apartment sale prices in the greater Seoul area rose 0.22% from the previous week, an accelerating pace, while Suwon Yeongtong surged nearly three-fold in a week from 0.41% to 1.19%. Nam Hyuk-woo, a real estate researcher at Woori Bank, analyzes that the price trend in southern Gyeonggi, sparked by expectations of a semiconductor industry boom, is moving to relatively cheaper neighboring areas.
■ Era of 10 Trillion Won in Holding Tax: If the fair market value ratio for the comprehensive real estate tax is raised from the current 60% to 80%, the housing holding tax for 2026 is estimated to swell to 10.0658 trillion won, up 15.7% from the current level, while the comprehensive real estate tax per taxpayer surges 1.9-fold from 3.24 million won to 6.24 million won. Seoul's increase in tax burden is the largest at 21.1%, with a sharp rise in the tax burden for high-priced homes and multi-home owners seen as unavoidable.
[News of Interest to Property Investors]
1. Need 1 Billion Won of Your Own to Enter Seoul...Housing Ladder Severed by Regulations
Key Summary: After KB Kookmin Bank abruptly limited mortgage ceilings to 300 million won, Shinhan Bank also effectively reduced its ceiling by 50 million won by suspending new MCG and MCI enrollments starting the 10th. In June alone, bank household loans surged by 7.6 trillion won, concentrating half of this year's first-half increase (15.7 trillion won), while mortgages rose 4.3 trillion won, the highest since June last year. Financial authorities have signaled they will announce additional regulatory measures targeting non-resident single-home owners late this month. Professor Lee Chang-moo of Hanyang University holds that since the growth rate will rise, the assessment of household debt risk should also change.
2. After Dontan, It's Yeongtong...Gains Tripled in a Week
Key Summary: In the first week of July (as of the 6th), apartment sale prices in the greater Seoul area rose 0.22%, a larger gain than the previous week's 0.20%, with Seoul up 0.30% and Gyeonggi up 0.23%. Hwaseong Dongtan maintained a high increase rate of 1.29% even after being designated a regulated area, while Yongin Giheung rose from 0.39% to 0.56% and Guri from 0.30% to 0.64%, with gains actually accelerating. Gains also widened in neighboring areas that escaped regulation, including Hwaseong Byeongjeom (0.25%), Namyangju (0.21%), and Suwon Gwonseon (0.26%). With jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) prices rising in tandem, the housing cost burden on end-users is diagnosed as likely to grow further.
3. Housing Holding Tax Tops 10 Trillion Won If Comprehensive Tax Fair Value Ratio Hits 80%
Key Summary: According to estimates by the National Assembly Budget Office, if the fair market value ratio for the comprehensive real estate tax is raised from the current 60% to 80%, the housing holding tax for 2026 will increase 15.7% from the current level to 10.0658 trillion won. If raised to 95%, it is analyzed to swell 23.8% to 10.7726 trillion won. Seoul's housing holding tax is shown to surge 21.1% from 4.5191 trillion won to 5.4721 trillion won under the 80% application. The average comprehensive real estate tax per person is estimated to soar from the current 3.24 million won to 6.24 million won under the 80% application and up to 7.8 million won under the 95% application.
[Reference News for Property Investors]
Key Summary: The government will include in its tax law amendment late this month a plan to extend the tax special treatment for post-completion unsold homes outside the greater Seoul area, set to end at the end of this year, by one year until the end of 2027. The special treatment allows a single household with one home that additionally acquires a post-completion unsold home outside the greater Seoul area—with an exclusive area of 85㎡ or less and an acquisition price of 700 million won or less—to retain single-home benefits, including a 1.2 billion won tax exemption on transfer value, a long-term holding special deduction of up to 80%, and a 1.2 billion won basic deduction on the comprehensive real estate tax. As of May, the non-greater-Seoul area accounted for 83.6% (24,522 units) of the nationwide 29,350 post-completion unsold homes. A government official explained that accumulating unsold homes in the provinces could lead not only to a slump in the construction economy but also to a slowdown in consumer sentiment.
5. Repeated Temporary Extensions...Conflict with 'Owner-Occupied Single Home' Also Noted
Key Summary: In the first half of this year, greater Seoul apartment prices rose 3.21% and Seoul rose 5.11%, while the provinces gained just 0.17%, with Daegu (-0.73%), Gwangju (-1.57%), and Jeju (-1.03%) declining. With post-completion unsold homes outside the greater Seoul area (24,522 units) reaching 5.1 times the greater Seoul area (4,828 units), the second-home special treatment is also set to be extended together. Professor Emeritus Hong Ki-yong of Incheon National University diagnoses that even if the special treatment is extended, demand to purchase provincial homes is unlikely to move easily if the tax system is seen as liable to change again in the future. As stronger holding taxes and tax easing are pursued simultaneously, the interpretation is that the structural complexity of the tax burden by region and number of homes will be difficult to resolve for the time being.
6. U.S. Treasury Yields Stir Again...Hit Highest Since May
Key Summary: As military conflict between the United States and Iran resumed, the U.S. 10-year Treasury yield rose 2.9 basis points to 4.581% on the 8th, setting a new high since May this year. With Brent crude and WTI surging 4-5% and inflation concerns growing, the June FOMC minutes confirmed that a few members expressed the need to consider raising the base rate in light of the fallout from the Middle East war. The minutes stated that if the upside scenario materializes, almost all members judged that some degree of tightening would be necessary. Japan's 10-year yield also hit 2.90%, its highest in about 30 years since September 1996, amid rising tension in the global bond market.
▶Go to article: U.S. Treasury Yields Stir Again...Hit Highest Since May
▶Go to article: "How Can We Raise the Minimum Wage Even More?"...Small Business Committee Members Stage 'Protest Walkout'
▶Go to article: Bank Stocks Smiled as KOSPI Wobbled...'Defensive Stocks' Highlighted in Volatile Market
