[Examining Election Promises] Real Estate Measures: Youth and Newlywed Housing Supply vs Regulation and Tax Relief

The Crucial Benchmark Deciding Voter Sentiment in the April 15 General Election

[Image source=Yonhap News]

[Asia Economy Reporter Lim Chun-han] Ahead of the April 15 general election, the ruling and opposition parties have presented different approaches to the real estate issue. Since the inauguration of the Moon Jae-in administration, housing prices have skyrocketed, making the public more interested in real estate pledges than ever before. The real estate solutions proposed by major parties in this election are expected to be a crucial factor in swaying voters' preferences.

The Democratic Party of Korea focused on supplying 100,000 customized homes and financial support for youth and newlyweds. They plan to provide 50,000 homes for youth and newlyweds near subway and GTX stations in the Seoul metropolitan area's 3rd phase new towns and land development districts. Additionally, they aim to secure 40,000 homes through urban regeneration projects in metropolitan and regional hubs and land development, and 10,000 homes on sites such as the Yongsan Korail site in Seoul and national/public land.

The Democratic Party announced the establishment of a dedicated shared-profit mortgage for youth and newlyweds to support housing finance needed for home ownership. They intend to lower loan interest rates compared to general shared-profit mortgages, increase loan limits, and extend repayment periods. Furthermore, they plan to expand financial support by lowering interest rates on youth Didimdol Jeonse loans, increasing the scale of youth Jeonse and monthly rent loans from commercial banks, and introducing housing benefits for separate households of job seekers and university students.

The United Future Party emphasized deregulation and tax relief in real estate. To reduce the tax burden on the middle class, the party adjusted the high-priced housing standard from market price exceeding 900 million KRW to a publicly announced land price of 1.2 billion KRW or more. They also plan to restore the loan-to-value ratio (LTV) for mortgage loans from the current 40% to 60% in Seoul for actual demanders.

The United Future Party pledged to abolish the price ceiling system for pre-sale housing and ease redevelopment and reconstruction regulations on aging apartment complexes in downtown Seoul and 1st phase new town areas. They also announced a full review of the government's 3rd phase new town policy. Additionally, they promised to improve unreasonable subscription systems for single-person households, youth, and newlyweds, and to raise the policy loan limits for Jeonse and monthly rent deposits for newlyweds.

The Minsheng Party proposed exempting the comprehensive real estate tax for single-homeowners and restructuring it into a progressive system where those owning more homes pay more. The party pledged to abolish all LTV and debt-to-income ratio (DTI) standards set by financial authorities and allow the market and banks to autonomously determine loan levels. They also presented measures such as expanding the supply of affordable public housing and reforming the housing subscription system for actual demanders without homes.

The Justice Party announced plans to increase the comprehensive real estate tax (by 0.3% to 1.0% points for single-homeowners and 1.1% to 3.5% points for multiple homeowners) and to prohibit high-ranking public officials from owning two or more homes per household as a preemptive measure to curb speculation. The People's Party pledged to provide public rental housing to newlyweds using the 'Metro Housing' method, which secures housing space above subway stations.