▲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]
■ Third Supply Plan Imminent: The government will announce its third metropolitan housing supply plan, which mobilizes all available sites in Seoul to supply more than 50,000 additional units, as early as next week. The core of the plan is to restart the urban public housing complex project—which had effectively been halted since its introduction in 2021—across all of Seoul, including the three Gangnam districts, to supply 20,000 units. Analysts say measures to shorten permit processes for existing supply-delayed project sites such as Taereung CC and Gwacheon Racecourse will also be discussed.
■ PF Financing Support Expansion: Financial authorities are reviewing a plan to expand the Korea Housing Finance Corporation's public guarantee limit for real estate project financing (PF) from the current 6 trillion won to more than 8 trillion won. Measures such as excluding group loans from the household loan total or slightly easing the 1.5% total volume regulation set this year are also being discussed. Assessments say that if financing conditions on the supply side improve, whether construction-delayed sites resume has emerged as a key monitoring point for investors.
■ Sharp Rise in Tax Burden for Ultra-High-End Apartments: Among owners of collective buildings in Apgujeong and Banpo, those aged 70 and older number 12,083, accounting for 22–23% of the total. As the special long-term holding deduction is converted to a long-term residence deduction and the deduction ceiling is limited to 8 million won in 2027 and 600 million won—600,000 won from 2028 onward, the actual tax burden on ultra-high-end homeowners who have been paying comprehensive real estate taxes in the tens of millions of won is expected to increase significantly.
[News of Interest to Property Investors]
1. Additional Supply Plan of '50,000 Units Plus' Coming
Key Summary: The government will announce its third metropolitan housing supply plan, which mobilizes all available sites in Seoul to supply more than 50,000 additional units, as early as next week. Various options have come up for review, including restarting the urban public housing complex project (20,000 units), utilizing public sites and former school lots such as the Seoul Regional Public Procurement Service, LH Yeouido, the old Gwangjin-gu Office, Cheongdam High School and Gonghang High School, and partial lifting of greenbelt restrictions such as the Naegok-dong reserve forces training ground and Suseo train depot. President Lee Jae-myung is scheduled to preside over a closed-door real estate policy review meeting on the 7th to review comprehensive supply and financing measures. Measures to shorten permit processes for existing supply-delayed project sites are also expected to be discussed, making this a phase in which investors near urban redevelopment project sites need to check for changes in project pace.
Key Summary: Financial authorities are examining a plan to expand the KHFC's public guarantee limit for real estate PF from the current 6 trillion won to more than 8 trillion won. With about 3.2 trillion won executed through the first half, expanding the guarantee limit would lower construction firms' interest costs and increase financial institutions' incentive to supply funds. The likely direction is to ease loan regulations in the housing supply sector while further lowering the public guarantee limit for metropolitan jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) loans from the current 80% to below 70%. A principle-based restriction on jeonse loans for single-home owners is also being discussed, leading to an interpretation that the market could be reorganized toward a structure focused on investment linked to actual construction and actual supply rather than gap-investment strategies.
3. 12,000 Elderly Homeowners in Apgujeong and Banpo… Weighing Sell or Hold Amid Tax Burden
Key Summary: As of the end of June this year, among owners of collective buildings in Apgujeong and Banpo, those aged 70 and older numbered 12,083, accounting for 23.3% in Apgujeong-dong and 22.1% in Banpo-dong. As the comprehensive real estate tax long-term holding deduction is converted to a long-term residence deduction and the deduction limit is capped at 8 million won in 2027 and 600,000 won from 2028 onward, ultra-high-end homeowners who have been paying comprehensive real estate taxes in the tens of millions of won will bear the full amount exceeding the limit. It is estimated that if someone who acquired a 117㎡ unit in Apgujeong Hyundai No. 4 for 2.5 billion won sells it after 2029, the calculated tax amount would increase by about 1 billion won from the current level. While expectations for reconstruction are high, making a large-scale release of listings difficult immediately, observers say April to May next year—the assessment base date for comprehensive real estate tax—will be the first selling turning point.
[Reference News for Property Investors]
Key Summary: The Ministry of Land, Infrastructure and Transport is strongly reviewing a plan to supply 20,000 additional units in Seoul alone, including the three Gangnam districts, through the urban public housing complex project. Through May, resident proposals totaling about 60,000 units were received at 44 locations across 16 autonomous districts in Seoul, with the Nonhyeon Station area cited as a key candidate site in the Gangnam area. Under the Special Act on Public Housing, a 1.4-fold floor area ratio easing, exemption from the price ceiling system, and a public contribution rate of 10–15% are possible. Sites such as the Seoul Regional Public Procurement Service and LH Yeouido land had precedents of being scrapped in the past 8·4 Measures, so the progress of consultations with local governments and residents is cited as a variable that will determine the project's pace.
5. Normalizing 47 Stalled PF Sites Would Supply 10,000 Units in the Metropolitan Area
Key Summary: The number of PF residential facility project sites undergoing court auctions or public sales in the metropolitan area surged from 25 in January this year to 47, and their combined appraised value grew from 2.24 trillion won to 2.55 trillion won. If the 47 sites are normalized, about 9,900 units can be supplied, including prime-location sites such as Nonhyeon-dong (appraised value 277.8 billion won) and Dogok-dong (140.7 billion won) in Gangnam-gu, Seoul. Sixty percent of the sites being pushed for sale are unbroken ground, and sites eligible for conversion to private contracts number 29 (62%), leading to an assessment that with targeted support, occupancy could become a reality within two to three years.
6. New Non-Apartment Construction in Seoul Plunges 67% in Three Years
Key Summary: New construction use approvals for small buildings in Seoul plunged 67%, from 3,006 in 2022 to 993 last year, falling below 1,000 for the first time since 2000. This resulted from a significant deterioration in the profitability of new non-apartment construction due to rising construction and financing costs and the fallout from jeonse fraud. With remodeling and expansion increasing instead of new construction, major repairs and expansions accounted for 50.8% of all building use approvals in Seoul last year, surpassing new construction for the first time. Experts point out that the contraction of the non-apartment supply base could act as a factor pressuring the jeonse and monthly rent market for single-person households, young people, and newlyweds.
▶Go to article: KHFC PF Guarantee Limit Raised to 8 Trillion Won… 1.5% Loan Cap Easing Also Under Consideration
▶Go to article: Is the Abolition of Breach of Trust Backtracking?… Reviewing Keeping the Provision but Strengthening Requirements
▶Go to article: "Korea to Be Top Memory Power Until 2031"
