▲AI PRISM* Customized Economic Briefing
*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "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]
■ A Market Where You Can Neither Sell Nor Buy: An assessment has emerged that the government's tax reform plan, which simultaneously strengthens property holding taxes and capital gains taxes, is combining with high-intensity lending restrictions to create a "transaction-impossible" structure in reality. Real estate experts warned that the market structure makes normal transactions impossible, saying, "Only cash-rich investors holding tens of billions of won in assets or the 'young rich' can move to buy."
■ Real Buyers Lowering Their Sights to the 2 Billion Won Range: The day after the tax reform plan was announced, brokerages near Dangsan-dong in Seoul's Yeongdeungpo District received more than 10 inquiries in a single morning from people looking for apartments in the 2 billion won range. While 84-square-meter units in station-area complexes such as Dangsan Raemian 4th and Dangsan Central IPark are trading in the 2.3 to 2.5 billion won range, an analysis by data service Kokjib found that listings in the high-priced top-quintile areas plunged 32.5% compared with the average of the previous three weeks.
■ The Gap Between Greenbelt Removal Expectations and Reality: On news that the government is reviewing the removal of the greenbelt in the Gangnam area, asking prices for vacant land around Jagok-dong in Gangnam District more than doubled, from 7 to 8 million won per 3.3 square meters to 18 to 20 million won. However, as seen in the backlash against forced expropriation in the Seoripul 2 District, analysts said there is still a long way to go before an actual supply effect materializes, with resident conflicts, the Seoul city government's cautious stance, and infrastructure shortages overlapping.
[News of Interest to Real Estate Investors]
Key Summary: The government's tax reform plan simultaneously strengthened property holding taxes and capital gains taxes, while no easing of the acquisition tax—essential for revitalizing transactions—was made, prompting criticism of a "double shackle." A real estate expert in the financial sector said, "With property holding tax increases carried out without transaction tax relief, this could lead to rising rents and frozen listings." Policy consistency issues also surfaced, as the government pressured owners to release listings by saying it would end the moratorium on heavy capital gains taxes for multi-home owners, then changed the comprehensive real estate tax criteria this time. Tax experts pointed out that if taxation criteria flip like the palm of a hand on assets held for decades, such as real estate, government policy cannot gain traction.
Key Summary: Immediately after the tax reform plan was announced, demand inquiries concentrated on station-area complexes priced under 3 billion won, including Dangsan-dong in Yeongdeungpo District, Ahyeon-dong and Sinsu-dong in Mapo District, and Godeok-dong in Gangdong District. An 84-square-meter unit at Mapo Raemian Prugio recently traded at 2.5 billion won, and nearby brokerages raised the possibility that, if demand continues, this housing type could enter the 3 billion won range. On the other hand, at ultra-high-priced complexes such as Apgujeong, the frozen-listing phenomenon intensified over distressed-sale listings, as expectations of reconstruction price increases combined with a wait-and-see stance. Meanwhile, as the special long-term holding deduction shifted from a holding basis to a residence basis, movement to convert rental units to owner-occupancy was also detected, showing signs that concerns over reduced rental supply are becoming reality.
Key Summary: President Lee Jae-myung directly addressed the structural inequity at a Cabinet meeting on the 4th, noting that while the top earned income tax rate reaches 49.5%, taxes amount to only a few billion won even when real estate capital gains reach 10 billion won. The president raised his voice regarding the current capital gains tax, saying it "does not fit the purpose of housing protection" and that "it protects real estate investment and speculation." Regarding the temporary easing of heavy capital gains taxes for multi-home owners, he explained that it was a step toward gradual normalization rather than complete abolition, while also saying, "If there are unjust or significantly erroneous parts, I will correct them without limit," leaving open the possibility of further adjustments after the legislative notice period (until the 20th). The stance of strengthening taxation has been reaffirmed at the level of the top policy decision-maker.
[Reference News for Real Estate Investors]
Key Summary: On news that the government is reviewing the removal of the greenbelt in the Gangnam area, asking prices for vacant land around Jagok-dong in Gangnam District have surged to 18 to 20 million won per 3.3 square meters, drawing crowds of buyers. Kim Yoon-duk, Minister of Land, Infrastructure and Transport, declared last month, "There is a strong desire to build homes even by removing the greenbelt," and Deputy Prime Minister Koo Yun-cheol also said measures to utilize military facilities are under review. Of Seoul's 149.1 square kilometers of greenbelt, land actually available for development is extremely limited, and residents who opposed the forced expropriation of the Seoripul 2 District are prepared to file administrative lawsuits. Experts expressed doubt about an immediate supply effect, saying, "The remaining greenbelt is deep in the mountains, where the subway doesn't even reach."
5. Seoul Sectional Building Registration Applications Down 18.7% Year-on-Year
Key Summary: In July, the number of real estate registration applications for sectional buildings in Seoul was 79,220, down 18.7% from the same month last year (97,422) and down 13.7% from the previous month. This is interpreted as the result of a deepening wait-and-see attitude among market participants, as policy variables such as lending restrictions, interest rate burdens, and tax reform overlapped. By district, Seocho District plunged 49.6% year-on-year, the largest drop, while Gangbuk District (+59.9%) and Dobong District (+45.0%), which have relatively lower price burdens, instead surged, confirming in figures the shift of demand to the outskirts. The polarization phenomenon is forecast to become even more pronounced if the contraction of high-priced-area transactions resulting from the tax reform begins in earnest.
Key Summary: An amendment to the Reconstruction Profit Recapture Act, sponsored by People Power Party lawmaker Kwak Kyu-taek, is drawing attention as legislation that crosses party lines, as ruling party elder Park Jie-won of the Democratic Party joined as a co-sponsor. The amendment excludes excess profits arising from reconstruction projects in 89 population-declining areas from the levy, aiming to exempt them from the current law's provision that recaptures up to half when profits exceed 80 million won per union member. However, a ruling party lawmaker on the National Assembly's Land Committee suggested the measure has greater declaratory significance than actual policy effect, saying, "The places where large reconstruction excess profits occur are limited to the three Gangnam districts and Yongsan District." Given the ruling bloc's stance emphasizing the "recapture of unearned income," the abolition of reconstruction profit recapture has effectively been taboo, so some pointed out the need to watch for future changes in the legislative landscape regarding regional redevelopment projects.
▶Go to article: EVs Left Out of Production Tax Credit… "China's Offensive Will Intensify"
▶Go to article: New ISA That Tells You to Buy Only Domestic Stocks… 'Shackles' on Existing Accounts
▶Go to article: Samsung Electronics No. 1 in Q2 DRAM Market Share… Rankings Determined by Commodity Product Proportion
