MBC Radio Appearance, Explanation of Real Estate System Reform Direction... Efforts to Ease Burden on Actual Homebuyers
[Asia Economy reporters Ryu Jeong-min and Park Cheol-eung] Following the ruling party's defeat in the April 7 by-elections, the party is attempting to shift its policy trajectory toward easing real estate regulations, and the Blue House has indicated that it does not oppose this movement. This appears to be connected to President Moon Jae-in’s acknowledgment of the failure of real estate policies during his 4th anniversary press conference.
◇ Blue House: "Burden on long-term single-homeowners should be reduced" = Lee Ho-seung, Chief of Policy at the Blue House, appeared on MBC Radio’s ‘Kim Jong-bae’s Focus’ on the morning of the 12th and said, "There is a consensus that the burden on those who own a single home and have lived in their own house for a long time should be reduced."
Additionally, Lee stated, "44% of all households do not own a home. Young people and newlyweds also need to acquire new homes," adding that the ruling party and the Blue House are discussing ways to ease the burden when these groups purchase new homes.
In a special speech marking his 4th anniversary on the 10th, President Moon Jae-in said, "There is a need to adjust parts where it is actually becoming difficult for genuine buyers to purchase homes or where the burden is increasing." While President Moon has mentioned the necessity of changes in real estate policy before, this is effectively the first time that specific details have been conveyed through statements by senior Blue House officials.
In this regard, the Democratic Party of Korea plans to prepare and announce real estate measures within this month, and it is interpreted that the ruling party and the Blue House share the view of easing the burden on single-homeowners. However, Lee expressed a negative stance on easing the comprehensive real estate holding tax (종합부동산세, 종부세) standards, making it difficult to predict its realization.
Regarding raising the 종부세 taxation threshold to 1.2 billion KRW, Lee said, "This is something that requires more careful consideration," adding, "Considerations should be made from the perspectives of demand and tax equity." There is also considerable caution within the Democratic Party concerning the 종부세.
Rather than adjusting the baseline (9 hundred million KRW for one household with one home), there are observations that more weight is being placed on increasing deduction rates for the elderly and deferring taxation until the home is transferred, inherited, or gifted.
Meanwhile, when asked whether the government is considering easing loan regulations, Lee responded, "We need to consider all groups, including those without homes, young people, newlyweds, and single-homeowners with specific characteristics," and conveyed that they are contemplating measures to protect genuine buyers.
◇ Ruling party’s Real Estate Special Committee begins full operation… Loan regulation easing also discussed ‘with options open’ = The Real Estate Special Committee, reorganized after Song Young-gil’s inauguration as Democratic Party leader, will hold its first meeting this afternoon.
They are reviewing all options, including easing loan regulations such as Loan-to-Value (LTV) and Debt-to-Income (DTI) ratios for those without homes, expanding the property tax reduction threshold for single-homeowners (from 600 million KRW to 900 million KRW), and raising the 종부세 imposition standards.
They have been conducting simulations on the market impact of various scenarios through related ministries such as the Ministry of Economy and Finance and the Financial Services Commission, and decisions are expected to be made based on these analyses.
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