Jugeonhyeop "2.19 Measures Insufficient... Tax Support for Unsold Housing Should Be Expanded" Government Proposal

Regarding the 'Regional Construction Market Supplementary Measures'
"Follow-up Actions Needed for Real Effectiveness"

The Korea Housing Builders Association demanded additional measures from the government, stating that "the housing market can only normalize if demand stimulation measures such as tax and financial support, which were not included in the February 19 measures, are prepared."

On the 6th, the association announced that it recently submitted related proposals to the Ministry of Land, Infrastructure and Transport, the Ministry of Economy and Finance, the Ministry of the Interior and Safety, the Financial Services Commission, and the Financial Supervisory Service. They believe that the 'Regional Construction Market Supplementary Measures' announced on the 19th of last month are insufficient in effect and are requesting follow-up actions and additional support plans.

Seoul Yeongdeungpo-gu, Korea Housing Construction Association building. Provided by Korea Housing Construction Association

In the 'Proposal for Follow-up Measures and Supplementary Plans for the February 19 Measures,' the association suggested ▲expanding the purchase volume of unsold units after local completion ▲relaxing the guarantee eligibility criteria for small and medium enterprises when borrowing from secondary financial institutions ▲allowing registration rental of unsold apartments after local completion and the prompt enactment of a bill for temporary reduction of development charges.

They also requested a temporary five-year capital gains tax reduction when acquiring unsold houses and exclusion of acquisition tax surcharges for multi-homeowners. They stated, "Although the government is implementing special tax measures when acquiring unsold houses after local completion to resolve unsold inventory, the scope and range of application are limited, resulting in practical limitations in resolving unsold units."

Furthermore, they argued that the preferential interest rates of Didimdol loans applied when purchasing unsold houses after local completion should be extended to the metropolitan area, and preferential interest rates should also be applied to general loans (non-policy funds) from commercial banks.

Housing Sales Transaction Volume by Region. Provided by Korea Housing Builders Association

They emphasized that financial regulation easing is essential to revitalize housing transactions. The association called for the immediate abolition of the total loan volume system and a one-year postponement of the three-stage application of the Debt Service Ratio (DSR) stress test. They said, "After the implementation of the second stage of the stress DSR, transactions sharply declined, and if the third stage is implemented, housing transactions will virtually come to a halt," adding, "Focusing solely on managing total household debt has neglected housing stability for genuine demanders such as low-income households without homes."

They also urged financial institutions to be encouraged to increase their own capital ratios voluntarily regarding real estate project financing (PF) and to defer the differential application of risk weights and reserves until the market recovers. Additionally, they stated the need to extend or postpone the implementation of the relaxation of loan loss reserve regulations in mutual finance sectors.

Jung Won-ju, chairman of the Korea Housing Builders Association, said, "The housing construction industry, which plays a supporting role in the real economy, is facing a liquidity crisis due to worsening domestic and external economic conditions," and added, "We hope the government listens to the housing industry's proposals to invigorate the regional economy and contribute to national housing stability."