The tax reform plan the government unveiled on the 3rd focused on raising the holding-tax burden on expensive homes, multiple-home owners and owners of a single home they do not live in, while tightening capital gains taxes by trimming the long-term ownership deduction. In the Gangnam and Seocho districts of Seoul, where ultra-expensive homes are concentrated, the tax burden is expected to rise sharply. As elderly owners have put out distressed listings at steeply reduced asking prices, home prices there have turned lower.
Ten days later, on the 13th, the government announced a comprehensive real estate package that, if carried out as described, could add more than 230,000 homes in the greater Seoul area. Across its various supply measures, including the development of housing sites, the government stressed "speed." The package also drew a positive assessment for including steps to spur private-sector supply, which the government had previously resisted — easing the consent threshold for redevelopment projects and cutting acquisition taxes for sites that break ground quickly.
What remains now is whether the policy will be pursued as announced. Since the Ministry of Land, Infrastructure and Transport (MOLIT) described the measures as a "plan for the rapid supply of homes to stabilize the rental and sale markets," carrying out the announced steps as planned could stabilize the rental market early and ease, to some degree, the fear of missing out (FOMO) among owner-occupier buyers hoping to buy a home.
As has happened with every real estate package, the market doubts the measures will work. The largest share of the newly announced public housing sites — 21,700 homes — is in central Namyangju, where the goal is to break ground by the first half of 2030. That is possible only if the time long required for public housing-site development is cut roughly in half. Because this is an untried path, most observers remain skeptical about whether it can be done.
In past announcements, the government emphasized supply "volume." In the Sept. 7 package last year, it pledged to break ground on an average of 270,000 homes a year in the greater Seoul area through 2030, for a total of 1.35 million homes. The government said it was achievable; the market saw it as difficult. In fact, as of the first half of this year, the achievement rate against this year's target of 269,000 homes stood at just 19.3% in Seoul and 24.2% across the greater Seoul area. Perhaps out of a determination not to lose more trust by playing the boy who cried wolf, the government is now stressing speed over volume. It must keep in mind that only by convincing the public that "this time is different" can its policy gain momentum.
