From now on, existing single-homeowners who acquire a new house in any of the 89 population-declining areas nationwide will maintain their status as single-homeowners. They will receive the 'one household, one home' special tax treatment when paying property tax, comprehensive real estate tax, capital gains tax, and others.
This is part of the government's 'Second Home Activation' plan announced in the '2024 Economic Policy Direction' to revitalize population-declining areas. Specific requirements such as acquisition price and applicable regions will be announced later.
Experts agreed with the purpose of activating second homes but believed it would be difficult for the local real estate market to fully recover.
Ham Young-jin, head of the Zigbang Big Data Lab, stated, "In some local metropolitan cities experiencing population decline and aging, deteriorating residential conditions and slumification of old downtown areas, abandoned vacant houses in rural farms, and stagnation of renovation projects for old houses in the outskirts of the metropolitan area pose significant future population risks to the housing market."
He added, "Tax benefits for second homes among multi-homeowners are expected to encourage additional home purchases in population-declining areas, leading to an increase in the resident population within those regions. Benefits are anticipated mainly in areas with leisure, tourism, and retirement demand such as Gangwon Province and Jeju." He noted that it would be difficult for traditionally agricultural or rural towns and other local areas with underdeveloped infrastructure to benefit.
Lee Eun-hyung, a research fellow at the Korea Institute of Construction Policy, also described the second home activation as "generally positive." He said, "At a time when local extinction due to population decline is an inevitable future, owning two or more houses, whether inherited or rural homes, should not automatically be considered speculation."
The government also introduced a 'support triple package' to protect tenants of multi-family and multi-unit houses who face the risk of reverse jeonse (key money deposit lease). When tenants directly purchase small and low-priced houses (excluding apartments) they currently reside in, acquisition tax will be reduced by up to 2 million KRW only this year, and they will maintain their status as non-homeowners when applying for housing in the future.
Small and low-priced houses must have an exclusive area of 60㎡ or less, with acquisition prices below 300 million KRW in the metropolitan area and 200 million KRW in local areas. Benefits are given to tenants who have lived in these houses for more than one year, are non-homeowners, and are first-time homebuyers in their lifetime.
Additionally, registered rental business operators can temporarily transfer small and low-priced houses to the Korea Land and Housing Corporation (LH) and others this year. LH and local housing corporations will purchase more than 10,000 multi-family and multi-unit houses built within the year.
Ham said, "The risk of reverse jeonse is expected to decrease somewhat this year, but as the supply of apartments in Seoul decreases, there are concerns about rising jeonse prices. Efforts to resolve the chronic reverse jeonse problem in non-apartment housing will continue."
Lee said, "Literally, this is in the context of protecting ordinary citizens and supporting housing. The degree of acquisition tax reduction does not provide a reason to purchase houses that do not need to be bought. Activating housing transactions is a different matter."
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