Next Year's Official Price Realization Rate for Apartment Complexes at 69%... "Enhancing Balance in Market Price Reflection Rate"

Real Estate Official Price Realization Rate Frozen for 2 Consecutive Years
Uncertainty Over National Assembly Passage of Bill to Scrap Moon Administration Roadmap
Selective In-Depth Review Areas... Increased Balance in Market Price Reflection Rate

The official real estate price realization rate (the ratio of official price to market price) will be frozen for the second consecutive year next year. It will be maintained at the 2020 level before the Moon Jae-in administration introduced the 'Official Price Realization Roadmap' (hereinafter referred to as the Roadmap) for the third year in a row (apartments 69.0%, detached houses 53.6%, land 65.5%).

The government had previously announced plans to abolish the Roadmap, but since the necessary legal amendments have not been completed, it decided to freeze the rates. Therefore, next year's official prices will only reflect market price fluctuations.

View of downtown apartments from Namsan, Seoul / Photo by Yonhap News

"Freezing the realization rate considering inflation and other factors"

On the 19th, the Ministry of Land, Infrastructure and Transport reported the '2025 Real Estate Price Official Announcement Realization Plan Revision' at the Cabinet meeting. This decision was made based on the judgment that if the current Official Price Act and Roadmap were followed, next year's official prices would rise sharply, causing side effects such as increased holding tax burdens and reduced welfare benefits. Official prices are used in 67 systems including property tax and health insurance premiums, and the realization rate shows how much the official price reflects the market price.

According to the Roadmap, next year's realization rates should be 78.4% for apartments, 66.8% for standard houses, and 80.8% for standard land. However, with the freeze decision, these rates will be 9.4 percentage points, 13.2 percentage points, and 15.3 percentage points lower than the existing realization rates, respectively.

A Ministry of Land, Infrastructure and Transport official said, "We considered the heavy burden on the public due to inflation and increased household debt." He added, "Since we announced the 'Rationalization Plan for Real Estate Official Price Calculation System' last September, it was deemed unreasonable to apply the realization rate according to the Roadmap. We judged that it is necessary to minimize changes in official price policy until the legal amendment discussions in the National Assembly are completed."

The Roadmap was implemented during the Moon Jae-in administration, setting a goal to increase the realization rate annually for apartments until 2030. However, as housing prices rose, the official prices used as the tax base also increased, leading to criticism about the growing tax burden. In response, the Yoon Suk-yeol administration considered revising the realization rate targets but ultimately decided to abolish the Roadmap.

The amendment bill to the 'Act on Official Announcement of Real Estate Prices,' which centers on abolishing the Roadmap, is pending in the National Assembly. It was introduced by Kim Eun-hye of the People Power Party in August, but due to the continued minority government situation following the April general election, its passage remains uncertain. The Ministry of Land, Infrastructure and Transport stated it will strive for the bill to pass the National Assembly promptly.

Turning point in the housing market... Enhancing balance in market price reflection rates

The Ministry of Land, Infrastructure and Transport plans to continue calculating official prices based on housing price fluctuations without artificially raising the realization rate. It also expects the tax burden to decrease due to the freeze. However, as the housing market is at a turning point, the tax burden may vary depending on price changes until the end of the year.

Apartment prices in the Seoul metropolitan area, including Seoul, showed an upward trend until August this year but have been declining since September due to expanded loan regulations such as the implementation of the second-stage Debt Service Ratio (DSR) and increased loan interest rates by commercial banks. Next year's official apartment prices will be based on January 1 of next year and will be disclosed (available for viewing) in March, with the final announcement in April.

Additionally, the Ministry plans to start next year a project to fairly adjust the market price reflection rates that have diverged between Seoul and other regions, apartments and detached houses, and high-priced and low-priced houses.

First, the official price proposals entered by surveyors at the city, county, and district levels will be evaluated, and areas that do not meet the balance evaluation criteria will be selected as in-depth review areas. Then, focusing on these in-depth review areas, real estate with low balance will be selected to improve the balance of official prices while minimizing the burden on the public. At this time, a certain proportion of the official price volume in the area will be selected (20% for apartments, 50% for standard houses, 25% for standard land), and the upper limit for balance improvement will be set at about 1.5% compared to the previous year's official price. The results of the balance improvement will be finally reviewed by external experts such as university professors, and the Ministry of Land, Infrastructure and Transport will finalize the official price viewing proposals.