This Year’s Standard Housing Official Price Falls 5.95%... Holding Tax and Others Expected to Decrease

Standard Land and Standard Housing Official Prices Determined and Announced
No Change in Official Prices Before and After Opinion Hearing
Realization Rate Lowered to 2020 Level

[Asia Economy Reporter Noh Kyung-jo] This year, the official land price and the official standard housing price will each decrease by 5.92% and 5.95%, respectively. This is the first time in 14 years since the global financial crisis in 2009 that the official price change rate has recorded a negative value. This is the result of lowering the realization rate to the 2020 level.

The Ministry of Land, Infrastructure and Transport announced on the 25th that it finalized the official prices of 560,000 standard land parcels and 250,000 standard houses as of January 1 this year after collecting opinions on the proposed official prices.

Residential area in Hannam-dong, Yongsan-gu, Seoul / Photo by Yonhap News

The nationwide official land price will fall by 5.92%. Considering that it rose by 10.17% last year, this is a decrease of 16.09 percentage points (p). There was no change before and after the opinion hearing, but the decline rate changed in Busan (+0.04%p), Gwangju, Chungbuk, Jeonnam, Jeju (each +0.01%p), and Gangwon (-0.01%p) in light of land characteristics and usage conditions.

By city and province, Gyeongnam had the largest decline at 7.12%, followed by Jeju (-7.08%), Gyeongbuk (-6.85%), Chungnam (-6.73%), and Ulsan (-6.63%). The drop in Seoul was 5.86%, smaller than the national average.

The nationwide official standard housing price will decrease by 5.95% compared to last year. Based on the replacement of samples due to the demolition of standard houses and housing characteristics and usage conditions, the decline rate changed in Daejeon (+0.02%p), Sejong (-0.09%p), and Gyeongbuk (-0.01%p).

By region, Seoul (-8.55%) fell the most, followed by Gyeonggi (-5.41%), Jeju (-5.13%), Ulsan (-4.98%), and Daejeon (-4.82%). The official standard housing price serves as the basis for calculating the official price of individual houses. Local governments use the official standard housing price to calculate the prices of individual houses.

The government lowered the official price realization rate (reflection rate compared to market price) to the 2020 level this year. This is one of President Yoon Suk-yeol’s election pledges and national tasks, aimed at reducing tax burdens. It takes into account the downward trend in housing prices and difficult economic conditions. The official price is used as a reference indicator in more than 60 areas, including real estate holding taxes (property tax and comprehensive real estate tax), gift tax, health insurance premiums, and development charges.

Meanwhile, the Ministry of Land reported that 5,431 opinions were submitted during this opinion hearing, a 53.4% decrease compared to last year. It was seen as influenced by the adjustment of the realization rate, local government participation, and the extension of the verification period. Among them, 391 opinions (reflection rate 7.2%) were reflected, an increase of 3.4 percentage points compared to last year.

The Ministry of Land will accept objections until the 23rd of next month, conduct an in-depth review by an external inspection team, and if changes are necessary, adjust and announce them on March 16. The official prices of individual land parcels and individual houses will be decided and announced by local governments on April 28.