Lee Jae-myung Signals Tripling Property Holding Tax, Eases Exit for Multi-Home Owners

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an 'AI-based personalized news recommendation and summary service' developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.

1. Lee Jae-myung: "Holding Tax Must Be Raised at Least Threefold to Reach Advanced-Nation Level…I Will Accept Political Damage"

Key Summary: President Lee Jae-myung said on the 23rd at the "National Grand Debate on Real Estate Policy" that domestic holding taxes must be raised at least threefold to reach the level of advanced nations. The direction the government is reviewing is not a uniform tax increase across all housing, but a phased, differentiated structure that uses the appropriate holding burden for a single home as a baseline and adds weight to ultra-high-priced and luxury homes, multiple homes, and holdings for speculative purposes. An expert also suggested that 1 billion won, twice the national average apartment price of 500 million won, should be set as the baseline for ultra-high-priced housing. There was also an argument that the comprehensive real estate tax standard should be shifted from the current number of homes to holding value, and measures to reduce or abolish the long-term holding and elderly tax credits for single-home owners (currently up to 80%) were also put on the table.

2. Balloon Effect Deepens in Non-Regulated Areas…Record Highs Continue in Dasan New Town and Byeongjeom

Key Summary: As Hwaseong Dongtan-gu, Yongin Giheung-gu, and Guri-si were designated as speculative overheating zones and adjustment target areas on the 1st of this month, and as land transaction permit zones from the 5th, purchasing demand is rapidly shifting to adjacent non-regulated areas. The 84-square-meter unit of "Dasan Yuseung Hannaedeul Central" in Dasan-dong, Namyangju, recorded a record high of 1.078 billion won, up 100 million won in a month, and the 84-square-meter unit of "Byeongjeom Station I'Park Castle" in Byeongjeom-dong, Hwaseong, was also traded at 855 million won, up more than 70 million won in less than a month. In contrast, the weekly increase in Hwaseong Dongtan-gu, which was incorporated into a regulated area, slowed sharply from 1.29% to 0.25%. A real estate researcher at Woori Bank offered the analysis that end-users continue their moves to buy low-priced properties, centered on adjacent areas that share a living zone with regulated areas.

3. Temporary Easing of Capital Gains Tax for Multi-Home Owners Under Review…Single-Home Deductions Limited by Frequency and Total Amount

Key Summary: President Lee Jae-myung said that while strengthening the holding tax, an "exit route" must be prepared together to allow multi-home owners to dispose of their properties. The government has already ended the moratorium on heavy capital gains taxation for multi-home owners on May 9 this year, and the top rate applied when owners of three or more homes sell homes subject to heavy taxation reaches 82.5% including local income tax. However, considering fairness, instead of applying the same level of moratorium as before, the approaches being mentioned are a partial reduction of the heavy tax surcharge rate (currently 20 to 30 percentage points) or a method limited to sales that reduce the number of homes. Measures to place a cap on the number of applications or the cumulative total of benefits for the capital gains tax exemption and deduction for single-home owners of one household are also under review, prompting the point that the accumulation of tax benefits through repeated trading of high-priced homes could be curbed.

4. Southern Gyeonggi Semiconductor Mega-City Emerges as a 4-Million Living Zone by 2040

Key Summary: The three cities of Yongin, Hwaseong, and Pyeongtaek are emerging as a metropolitan industrial city zone aiming for a total of over 4 million people by 2040, based on the semiconductor industry belt. Each city's 2040 target population is 1.52 million for Yongin (currently 1.1 million), 1.54 million for Hwaseong (currently 1 million), and 1.05 million for Pyeongtaek (currently 650,000), with Hwaseong recording the highest population growth rate among major cities nationwide at 12.4% over the past five years. Large-scale investments such as the expansion of Samsung Electronics' Pyeongtaek campus and the creation of SK hynix's Yongin semiconductor cluster are serving as the driving force for population influx. In contrast, neighboring Ansan (-4.7%), Gunpo (-5.8%), and Uiwang (-6.1%) show a clear population decline, with forecasts that the gap in regional real estate value will widen depending on links to the semiconductor belt.

5. Seoul Semi-Residential Zones Can Supply Apartments Without Retail

Key Summary: The Seoul Metropolitan Government has abolished the mandatory non-residential facility ratio and the prohibition of apartment use in semi-residential zones within 61 district unit planning areas, making it possible to supply apartments on their own. The measure stems from the judgment that mixed-use development projects in semi-residential zones failed to bear fruit due to rising retail vacancy, and this change has opened the way to build apartments without retail in all semi-residential zone district unit planning areas. In addition, a Seoul-type senior housing floor area ratio incentive (1.1 times the base floor area ratio) has been newly established in 156 zones, which is expected to speed up the supply of housing tailored to the elderly. The Seoul Metropolitan Government presented a goal of supplying 12,000 senior housing units by 2035.

6. Banks Raise Deposit Rates in Succession…Mortgage Rate Increases Accelerate

Key Summary: The five major commercial banks — Hana, NongHyup, Woori, Shinhan, and KB Kookmin — simultaneously raised their one-year fixed deposit rates to around 3.2% per year, while K Bank is operating a product with a rate of up to 5.0%. As of the 23rd, the mortgage rates (5-year mixed and periodic) of the five major banks were tallied at 4.82 to 7.55%, and the upper end of NH NongHyup Bank's mortgage rate has already exceeded 7.5%. With the second-quarter GDP growth rate of 0.6% exceeding the Bank of Korea's forecast (0.2%), expectations are emerging that an additional rate hike of 0.25 percentage points will take place next month. As room remains for further increases in deposit rates, the observation is that the rise in lending rates will continue for the time being.