▲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 summary service" developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.
[Key Issue Briefing]
■ Public Sentiment Erupts Ahead of Grand Forum: Ahead of the property policy grand forum chaired by President Lee Jae-myung on the 23rd, online policy proposals have surpassed 1,600. The housing finance sector drew the most at 742 proposals, and with the government set to reflect the opinions in its tax law revision at the end of this month, market attention is concentrating.
■ Direction of Tax Reform Takes Shape: Kim Yong-beom, chief of the Presidential Office of National Policy, announced a policy of differentiated taxation on ultra-high-priced owner-occupied single homes, signaling that a plan to ease capital gains tax burdens for those who sell within a certain period is also under review. On easing regulations for reconstruction and redevelopment, he expressed a negative stance, saying it takes at least three to five years to reach actual supply, in what analysts interpret as supply policy and tax reform heading in different directions.
■ Banks Tighten Lending: KB Kookmin Bank is raising the intensity of its household loan volume management, including waiving early repayment fees on credit loans to reduce existing loan balances. With the household loan balance of the five major commercial banks already recording 777.2306 trillion won as of the 15th of this month, exceeding the annual growth target, forecasts are emerging that similar measures will spread to other banks.
[News of Interest to Property Investors]
1. "Please Ease Loans for Non-Homeowners"…Pleas Flood Grand Forum Message Board
Key Summary: Ahead of the "National Grand Forum on Property Policy" chaired by President Lee Jae-myung on the 23rd, online policy proposals have surpassed 1,600. The housing finance sector received the most opinions at 742, with successive calls to ease loan regulations for non-homeowners and first-time homebuyers. In the property tax sector, there were also considerable voices urging relief of the tax burden on single-home households and a reduction in capital gains tax, and the government plans to reflect the opinions in its tax law revision at the end of this month. Meanwhile, according to a survey by the Korea Real Estate Board for the second week of July (as of the 14th), Seoul apartment sale prices rose 0.30% and jeonse prices rose 0.28% from the previous week, continuing a joint upward trend for the 75th consecutive week.
Key Summary: Kim Yong-beom, chief of the Presidential Office of National Policy, announced a policy of differentiated taxation on ultra-high-priced owner-occupied single homes, and said that a tax reform lowering the capital gains tax burden for those who dispose of homes within a certain period is also under review. The specific criteria for ultra-high-priced homes and tax rates will be included in the tax law revision at the end of July after the grand forum on the 23rd. On revitalizing reconstruction and redevelopment, he expressed a negative stance, saying short-term supply effects are hard to expect and that there could instead be a counterproductive effect of supply temporarily declining. Regarding housing supply in Seoul's semi-industrial areas, he said cooperation between the central government and Seoul is needed and that he is pursuing a separate meeting with Mayor Oh Se-hoon.
3. KB Waives Early Repayment Fees…Encourages Early Repayment of Credit Loans
Key Summary: KB Kookmin Bank is waiving early repayment fees on personal credit loans from the 20th until the end of the year, moving to reduce existing loan balances. The household loan balance of the five major commercial banks stood at 777.2306 trillion won as of the 15th of this month, up 6.4077 trillion won from the end of May and already exceeding the annual growth target. The increase in credit loans was particularly notable, with the personal credit loan balance rising 1.3764 trillion won over the same period, nearly double the increase in mortgage loans (760.8 billion won). KB Kookmin Bank had previously uniformly cut its mortgage loan limit from 600 million won to 300 million won, and the financial sector forecasts a strong possibility that the household loan volume management stance will spread to other banks.
[Reference News for Property Investors]
4. Warning Light on Corporate Loan Delinquency Rate…Banks "Proactively Managing Risk"
Key Summary: With the Bank of Korea raising the base rate for the first time in three years and six months, a forecast has emerged that the corporate loan delinquency rate will rise by nearly 0.1 percentage point in the second half. The simple average delinquency rate on small and medium-sized enterprise loans at the five major commercial banks as of the end of June this year was 0.59%, up 0.11 percentage point from the end of last year (0.48%). Bank A estimated internally that the overall corporate loan delinquency rate would rise 0.05 to 0.08 percentage point over the next one to two quarters, and analysts said pressure for rising delinquency rates would also grow for household loans, centered on vulnerable groups and leveraged investors. Over the outlook for market interest rates in the second half, observations that additional rises will be limited are clashing with forecasts that the upward trend will continue.
Key Summary: The "All New Champions City" mixed-use development project, being built on the former Jeonnam Bangjik and Ilshin Bangjik factory site in Imdong, Buk-gu, Gwangju, is set for its first sale of 3,216 units in September. With the government early this month announcing a plan to build an 800 trillion won semiconductor cluster on the Gwangju military airport site, evaluations are emerging that the atmosphere of the regional property market has turned around. Asking prices for nearby commercial land soared from 18 million won to 20 million won per 3.3 square meters after the sale news, and there are also high expectations that the semiconductor cluster, 20 minutes away by car, will boost demand for residences near workplaces. However, since all of Gwangju Metropolitan City has been designated a land transaction permit zone from the 14th of this month, the requirement to meet actual-use conditions is cited as a variable.
6. Reconstruction "Design Contract War"…Battles Break Out Before Construction Companies
Key Summary: At major reconstruction complexes such as Daechi Mido Apartment in Gangnam-gu and Olympic Family Town in Songpa-gu, design contract competition among architectural firms is heating up fiercely ahead of construction company selection. With 11 firms entering the bid for the Daechi Mido designer and 18 firms for Olympic Family Town, exaggerated promotion and fairness controversies are following in succession. In the case of Olympic Family Town, selection fell through as no candidate won a majority at the residents' general meeting, and it is pointed out that rebidding and holding another general meeting could increase the project schedule and cost burden. In the industry, voices are calling for institutional supplementation such as narrowing candidates through qualification screening and strengthening promotion standards.
▶Go to article: Warning Light on Corporate Loan Delinquency Rate…Banks "Proactively Managing Risk"
▶Go to article: BOK Warns of "Semiconductor Dutch Disease"…Counterarguments Say "Circumstances Differ" on Exchange Rate
