Korea's Ruling Bloc Revisits Property Tax Reform 20 Days After Unveiling

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

1. Single-Home Deduction Raised to 1.4 Billion Won Regardless of Residence; Tax Burden Set to Stay at Current Level

Key summary: The ruling party and the government are pushing to raise the basic comprehensive real estate tax deduction for owners of a single non-resident home from 900 million won to 1.2 billion or 1.4 billion won. If the deduction is finalized at 1.4 billion won, apartments with a market value below 2 billion won would fall outside the tax's scope. A rollback of the tax burden cap (from 150% to 200%) and a readjustment of the fair market value ratio are also being pursued, and the tax burden on multiple-home owners and non-resident owners is expected to ease substantially compared with the original reform plan. A revision to the Urban Redevelopment Act to transfer permitting authority for redevelopment projects of fewer than 500 units to district office heads is also being pursued, which observers say will speed up rebuilding and redevelopment.

2. High-End Redevelopment Wavers; Yeouido Fire-Sale Listings Emerge at 300 Million Won Discounts

Key summary: Listings priced 100 million to 200 million won below existing asking prices are emerging one after another, including a 156-square-meter unit at Yeouido Sibeom Apartment listed at 4 billion won. At Sambu and Sujeong apartments, ahead of association establishment approval in September, asking prices have fallen by up to 300 million won as more sellers seek to sell before restrictions on the transfer of association-member status take effect. Apartment listings in Yeouido-dong, Yeongdeungpo-gu, rose 17.9% from 621 to 732 after the tax reform plan was announced, far exceeding the increases for Seoul as a whole (9.5%) and Gangnam-gu (13.4%). With reduced long-term holding tax deductions sharply raising the tax burden on owners of redevelopment complexes with transfer gains of 3 billion won or more, older owners in particular appear to be weighing sales more seriously.

3. The Quota Trap: Household Lending Restrictions Jump Threefold

Key summary: Household lending restrictions imposed by 13 banks, including the five major banks, through August 12 this year totaled 79, 2.7 times the 29 recorded during the same period last year. In the period from April through August 12 alone, 71 restrictions were introduced, more than three times the 23 in the same period last year, and 57 of them, or 72% of the total, were concentrated in June and July. The restrictions spread to regional banks and internet-only banks, and KakaoBank extended measures it had applied to jeonse-deposit loans last year to mortgages and unsecured loans this year. Critics said the government's decision to double its annual growth target from 1.5% to 3% within four months amounted to an admission that the policy design had failed.

4. Average Seoul Apartment Price Reaches 1.6 Billion Won

Key summary: In KB Real Estate's August survey, the average sale price of a Seoul apartment stood at 1.60739 billion won, entering the 1.6 billion won range for the first time. The average for the 11 districts of southern Seoul was 1.99016 billion won, nearing 2 billion won, while the median price for the 14 districts of northern Seoul rose above 1 billion won for the first time, at 1.00167 billion won. Seoul apartment sale prices rose 1.14% this month from the previous month, with northern districts leading the gains, including Jungnang-gu (2.25%), Seongbuk-gu (2.08%) and Nowon-gu (1.95%). The KB Leading Apartment 50 Index stood at 99.4, up 0.20% from the previous month, as the price recovery continued.

5. Seoul Mayor Oh, Who Says 'Not One Centimeter' of Yongsan Park, Floats Tancheon Water Reclamation Center as Alternative

Key summary: Seoul Mayor Oh Se-hoon, opposing development of the main Yongsan Park site, has proposed the Tancheon Water Reclamation Center near Daecheong Station in Gangnam-gu (about 393,000 square meters) as an alternative site for housing supply. The Tancheon Water Reclamation Center is larger than Yongsan Children's Garden (about 300,000 square meters), and the possibility of supplying more than 5,000 units is being discussed, while its location is seen as competitive given its proximity to Daecheong Station on Subway Line 3 and Samsung Medical Center. With both the central government and the Seoul city government sharing a consensus on expanding downtown housing supply, there is a possibility that a compromise could emerge in further negotiations with the Ministry of Land, Infrastructure and Transport.

6. Government Eases Loans for Villas and Officetels, but on the Ground: 'No Homes Worth Buying'

Key summary: The government has decided to launch the Youth Future Bogeumjari Loan next January, applying a loan-to-value ratio of up to 80% for non-apartment homes priced at 400 million won or less to first-time buyers aged 39 and under, but questions have been raised about its effectiveness. The average sale price of multi-unit and low-rise houses traded in Seoul from January through July already exceeded 428.52 million won, and the average floor area of Seoul officetels priced at 400 million won or less was found to be just 28.30 square meters. From January 2018 through July this year, the Seoul officetel sale price index rose only 3.17%, a stark contrast with the 31.44% rise for apartments over the same period, underscoring pointed criticism of their limits as a means of building wealth.