[2024 Economic Policy] 'Second Home' Purchase in Population Decline Areas to Receive 'Single Homeowner Benefits'

2024 Economic Policy Direction
Revitalization of Regional Economy and Construction Investment

One house acquired by an existing single-homeowner in a population-declining area will be excluded from the total number of houses, allowing them to receive incentives related to housing ownership and transactions. The purpose is to increase the resident population in underdeveloped areas and revitalize those regions.

The government jointly announced the '2024 Economic Policy Direction' containing these details on the 4th.

Revitalizing Population-Declining Areas with a Three-Pronged Project to Increase Resident and Visitor Populations

The government has decided to promote a 'Three-Pronged Project to Revitalize Population-Declining Areas' targeting underdeveloped regions outside key areas. First, to expand the resident population, it will promote the 'Second Home Activation' initiative. The core idea is that when an existing single-homeowner acquires one additional house in any of the 89 population-declining areas nationwide, it will still be considered as owning one house. Specific conditions such as the value of the newly acquired house and applicable areas will be announced later.

Until now, single-homeowners in the metropolitan area owning a house valued at 900 million KRW or less who purchased a house in a population-declining area were not eligible for the 'one household, one house' property tax benefits. However, going forward, such cases will be regarded as single-homeowners, and the existing metropolitan area house will be eligible for special tax treatment. The same applies to comprehensive real estate tax and capital gains tax.

Efforts will also be made to expand visitor populations by developing tourism infrastructure. Mini tourism complexes ranging from 50,000 to 300,000 square meters will be newly established, offering benefits such as priority installation of infrastructure and exemption from development charges. Upon project confirmation, support for infrastructure development such as roads and water supply and project implementation will be provided by utilizing and linking funds like the Local Extinction Response Fund and Regional Revitalization Investment Fund.

Tourism businesses with operations in population-declining areas will receive loan support with preferential interest rates up to 1.25 percentage points. For tourism fund loans, more than 60% will be preferentially allocated to local areas. Additionally, until the end of next year, companies that start businesses or establish offices in population-declining areas will be actively considered for acquisition tax exemptions and extensions of acquisition tax reductions upon sunset. Regarding key areas, the government will actively promote the establishment of major special zones related to jobs, education, urban convergence, and culture.

Comprehensive Support to Revitalize Regional Construction Investment

The government will also strengthen comprehensive support to revitalize region-centered construction investment. At the central government level, early execution of fiscal spending in the first half of the year will be pursued at the highest level ever, focusing on social overhead capital (SOC) projects.

For public investment, thorough management will be implemented to achieve a record-high execution rate of 55% in the first half of this year, with investments on the order of 60 trillion KRW.

In response to concerns about the contraction of local construction markets this year, non-metropolitan development charges will be temporarily reduced by 100%, and school site charges by 50%. This system, previously implemented twice in 2009 and 2016, is being reintroduced after eight years. Additionally, measures will be prepared to ease liquidity burdens on construction companies related to unsold and unstarted public housing sites after completion, including tax support, regulatory improvements, and strengthening the role of public enterprises.

To activate housing supply, the public sector's housing supply will be further expanded, and acceleration of land development projects will be promoted through participation by regional housing and urban corporations. In locations with strong demand such as the metropolitan area, the plan is to shorten land development project periods by discovering new sites and improving district planning procedures.

Along with this, through participation by regional housing and urban corporations and fair management, the government will promote site development and early housing construction for the major 3rd phase new towns this year, and accelerate supply for other new towns as well.