[Fact Check] "No Harm to Actual Buyers" "Sufficient Supply"... Is Kim Hyun-mi's Statement Correct?

Minister Kim Hyun-mi Appears on Radio to Explain 'Policy Failure'
7.10 Measures Alone Do Not Increase Burden on Actual Owners
However, Earlier Increase in Comprehensive Real Estate Tax Rate Significantly Raised Burden on Single-Homeowners

Minister of Land, Infrastructure and Transport Kim Hyun-mi is touching her hair after finishing her remarks at the comprehensive real estate policy meeting held at the National Assembly on the 15th. Photo by Yoon Dong-ju doso7@

[Asia Economy reporters Yoo In-ho and Moon Je-won] The claims made by Kim Hyun-mi, Minister of Land, Infrastructure and Transport, regarding the July 10 real estate measures and the housing market situation have come under scrutiny. Her statement on a radio broadcast the previous day that "the July 10 measures have little impact on actual homeowners with one house" has sparked widespread backlash. Additionally, her remark that "housing supply in Seoul is sufficient" has been criticized as ignoring reality. Is Minister Kim's assertion that the burden on multi-homeowners is increasing while actual homeowners are being protected incorrect?

According to industry sources on the 15th, the July 10 measures alone do not increase the tax burden on actual homeowners with one house. This is because the recent measures only raised the comprehensive real estate tax rates for owners of three or more houses nationwide or two or more houses in regulated areas. However, since the government had already increased tax rates for one-homeowners through the September 13, 2018, and December 16, 2019 measures, and due to adjustments in the fair market value ratio, holding taxes are inevitably rising. Therefore, it is difficult to claim that the government's measures do not increase the burden on actual homeowners.

According to a simulation of holding taxes for one-homeowners in Seoul analyzed by Woo Byung-tak, team leader of Shinhan Bank's Real Estate Investment Advisory Center, the higher the house price, the more the holding tax burden will surge next year. Assuming a uniform 10% increase in official property prices, a 59.26㎡ (exclusive area) unit in Junggye Mujigae, Junggye-dong, Nowon-gu, which is not subject to comprehensive real estate tax, will see only a 5% increase in holding tax next year. In contrast, the tax burden rises sharply as housing prices increase. For example, an 84.89㎡ unit in Hangaram, Ichon-dong, Yongsan-gu will see a 31.15% increase.

When market prices exceed 2 billion KRW, the holding tax burden increases further. For instance, an 84㎡ unit in Banpo Xi, Banpo-dong, Seocho-gu, which currently has a holding tax of about 10.32 million KRW, will see it surge by more than 43% to 14.8 million KRW next year. As Seoul apartment prices have recently soared, many complexes have newly become subject to comprehensive real estate tax, so even one-homeowners are expected to face a 5-40% increase in holding tax burden starting next year, depending on housing prices.

The industry points out that Minister Kim's statement that "more than 40,000 households are supplied annually in Seoul, and especially this year's supply volume is the largest at 53,000 households" is only half correct. The figure of 53,000 households cited by Minister Kim is based on the statistics from the "Plan to Strengthen Housing Supply Infrastructure in the Metropolitan Area" announced on May 6. At that time, the Ministry of Land, Infrastructure and Transport presented the apartment supply in Seoul and the metropolitan area as stable, projecting 53,000 households this year, 36,000 next year, and 50,000 in 2022 over three years.

However, the survey by Real Estate 114, a leading private research institute in Korea, differs significantly from the Ministry's statistics. The apartment supply in Seoul is estimated at about 43,000 households this year and about 22,000 households next year, which is approximately 10,000 and 14,000 households less than the government's figures, respectively.

The difference between the two statistics arises from differences in calculation criteria and the scope of aggregation. Real Estate 114 counts only complexes that have received approval for sale announcements to ensure statistical accuracy. In contrast, the Ministry's statistics include complexes that have completed permits based on the recruitment announcement for residents. Using the Ministry's method may inflate the supply volume.

In fact, among the 20,842 general sale units in Seoul this year, 69.1%, or 14,397 units, come from redevelopment projects. This includes the Dunchon-dong Jugong Apartments in Gangdong-gu, which has about 12,000 units and whose project has been delayed due to pricing issues.