Government Turns to 'Supply'... Firmly Says "NO" to Capital Gains Tax Relief Push (Comprehensive)

Deputy Prime Minister Hong Nam-ki Chairs the 13th Real Estate Market Inspection Meeting with Related Ministers

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is delivering opening remarks at the "13th Real Estate Market Inspection Meeting of Related Ministers" held on the 15th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

[Sejong=Asia Economy Reporter Kim Hyunjung] The government is pushing forward supply expansion projects such as public redevelopment and public reconstruction, while firmly stating that it will not pursue the capital gains tax relief that the market had expected.

Deputy Prime Minister and Minister of Strategy and Finance Hong Nam-ki chaired the 13th Real Estate Market Inspection Meeting with related ministers at the Seoul Government Complex in Gwanghwamun, Seoul, on the morning of the 15th, and announced this in his opening remarks.

◆ Now all-out on 'supply'... "4,700 more households in downtown Seoul"= At the meeting, measures to expand supply through public redevelopment and public reconstruction projects were repeatedly mentioned. In particular, attention was drawn to the fact that supply can be increased compared to existing plans, and that the burden on association members due to reconstruction projects can be reduced.

Regarding public redevelopment, Deputy Prime Minister Hong said, "A total of 70 sites applied, and Seoul City reviewed 12 sites located in existing maintenance zones among them and selected 8 sites as pilot project candidates." He explained, "Since each candidate site is located in a station area where high-density development is possible, if developed as planned, an additional supply of about 4,700 households will be realized in downtown Seoul." On the same day, Seoul City announced that it had selected 8 sites as the first pilot project candidates for public redevelopment: ▲ Sinmunno 2-12 ▲ Yangpyeong 13 ▲ Yangpyeong 14 ▲ Bongcheon 13 ▲ Sinseol 1 ▲ Yongdu 1-6 ▲ Gangbuk 5 ▲ Heukseok 2.

The four sites not selected on the day will be re-examined at the next selection committee, and the selected candidate sites will be finally designated as public redevelopment maintenance zones where projects can be implemented through resident consent, selection of public implementers (LH, SH), and establishment of maintenance plans. In addition, the selection results for 56 sites located in non-maintenance zones, which were not included in the review, will be announced in March.

Regarding public reconstruction, he explained, "Among the 15 complexes that applied for pre-consulting, we plan to respond with consulting results for 7 complexes," adding, "We reflected not only public interest securing measures such as donation but also deregulation such as zoning upgrades (from type 3 residential to semi-commercial areas) and relaxation of the ratio of non-residential facilities in mixed-use complexes (from 10% to 5%)." He continued, "According to the pre-consulting results, when public reconstruction is implemented, the number of housing units supplied in each complex is analyzed to increase by an average of 58% compared to the current situation, and the burden on association members decreases by an average of 37% compared to reconstruction carried out solely by the association." He emphasized, "The decision authority on whether to proceed with public reconstruction rests entirely with the owners such as the association and the promotion committee, so I hope they will make reasonable decisions based on the consulting results."

◆ Capital gains tax relief? NO... "Strict enforcement of tax strengthening"= Regarding the expected capital gains tax relief, he expressed the intention to proceed with the existing policy without reversal. Deputy Prime Minister Hong said, "To encourage the release of housing supply, the implementation date for strengthening comprehensive real estate tax and capital gains tax was set to June 1 this year, and until then, we have guided the sale of houses to avoid the increased burden, and now that implementation date is just over four months away." He explained, "We are closely monitoring the supply trend, expecting the release of properties from multi-homeowners and others accordingly."

He added, "The government's determination to block speculative demand for housing is unwavering," emphasizing, "We will strictly and firmly enforce the policy package, including tax strengthening and liquidity regulations, prepared to block speculative demand." He also added, "To establish not only stability in the real estate market but also fair order, we will strengthen tax investigations and crackdowns on illegal activities throughout the year, with the determination to track down and hold accountable market-disturbing acts such as disguised gifts and fraudulent subscription."

Regarding the recent real estate market, he diagnosed that the sales market is unstable and there have been difficulties in the jeonse (long-term lease) market supply and demand. Deputy Prime Minister Hong said, "With the expansion of long- and short-term housing supply bases last year, the market is being reorganized around actual demand, with an increase in the proportion of non-homeowners among buyers and an increase in the proportion of corporations among sellers," but he also evaluated, "However, recently, instability in the sales market has been detected, so we are monitoring with greater vigilance." Regarding the jeonse market, he analyzed, "Although there were difficulties in supply and demand due to friction factors from the introduction of the three lease laws and household segmentation, the recent trend of increasing renewal rates of jeonse and monthly rent indicates that the housing stability of existing tenants is improving."