"Expansion of Regulated Zones Inevitable... Broad Agreement on Higher Property Taxes, Lower Transaction Taxes" [Real Estate AtoZ]

[2025 National Assembly Audit]
Speculative and Adjustment Zones Set for Expansion
Foreign Real Estate Transaction System to Be Overhauled

As expectations rise that the government will introduce new measures to stabilize the real estate market, Kim Yoonduk, Minister of Land, Infrastructure and Transport, stated on the 13th that "expanding regulated areas is inevitable."

During the National Assembly Land, Infrastructure and Transport Committee audit held that day, Minister Kim responded to a question from Kim Eunhye, a member of the People Power Party, regarding the potential expansion of regulated areas by saying, "I believe it is unavoidable." The previous day, a high-level policy consultation involving the Democratic Party, the government, and the presidential office discussed follow-up measures to address the sharp rise in housing prices in parts of Seoul and Gyeonggi Province.

Expansion of Regulated Areas Likely ...Agrees on Higher Property Taxes, Lower Transaction Taxes

Kim Yoonduk, Minister of Land, Infrastructure and Transport, is attending the 2025 National Assembly Land, Infrastructure and Transport Committee audit held on the 13th at the National Assembly, responding to members' inquiries. Photo by Yonhap News

The main measures under consideration include expanding the number of speculative zones and adjustment target areas designated by the Ministry of Land, Infrastructure and Transport. Districts where prices have recently surged, such as Seongdong, Gwangjin, Mapo, Dongjak, Gangdong, Yangcheon, and Yeongdeungpo in Seoul, as well as Gwacheon City and Bundang District in Seongnam City, Gyeonggi Province, are being mentioned as candidates for additional designation. Currently, only four areas-Gangnam, Seocho, Songpa, and Yongsan Districts-are designated as regulated areas.

Minister Kim commented, "The details of the real estate measures are still under review." Regarding financial and tax measures such as reducing loan limits, applying the debt service ratio (DSR) to jeonse loans, or raising property holding taxes, he said, "These are not under the jurisdiction of the Ministry of Land, Infrastructure and Transport, so it would not be appropriate for me to comment," and refrained from further remarks.

However, when asked about proposals to increase housing supply by lowering transaction taxes such as acquisition and capital gains taxes, Minister Kim responded, "I basically agree with the overall framework of increasing property holding taxes and reducing transaction taxes." Having previously stated at his first press conference after taking office last month that "raising property holding taxes is necessary" as a personal opinion, he has now also emphasized the need to lower transaction taxes, thereby clarifying the direction of real estate tax reform. This suggests a policy of increasing the tax burden for property owners while reducing taxes on transactions to naturally encourage more buying and selling.

Regarding the officially assessed property values, Minister Kim said, "I believe the gap between market prices and officially assessed values causes various problems," and added, "A significant portion of the research project related to the reform of the price disclosure system has been completed."

When asked whether additional housing supply measures would be included in the real estate policies to be announced this week, Minister Kim explained, "We are considering a comprehensive plan, which could include supply measures." At his first press conference after taking office, Minister Kim also emphasized that the real estate policies of the Lee Jaemyung administration would not be one-off measures but a comprehensive approach covering the overall market structure. In particular, as the September 7 supply measures were criticized for their limited impact on increasing actual supply in Seoul, there is growing analysis that the upcoming measures are likely to address these shortcomings.

In relation to this, Koo Yooncheol, Deputy Prime Minister and Minister of Economy and Finance, stated at the National Assembly Strategy and Finance Committee audit held on the same day, "We will accelerate the pace of supply, while also announcing policies that can be implemented on the demand side," adding, "We are likely to announce the direction regarding tax policies as well."

"Foreign Real Estate Purchase System to Be Reformed Based on Reciprocity Principle"

Kim Yoonduk, Minister of Land, Infrastructure and Transport, is attending the 2025 National Assembly Land, Infrastructure and Transport Committee audit held on the 13th and responding to lawmakers' questions. Photo by Yonhap News

Minister Kim commented on the issue of foreigners purchasing domestic housing, saying, "It is difficult to consider the current system fair." He also acknowledged some loopholes, stating, "That could be the case," in response to concerns that foreigners are not required to submit funding plans, creating regulatory blind spots.

Minister Kim stated, "If there are legal limitations that favor foreigners, we will certainly address them," and added, "Since countries like China have fundamentally different systems regarding land and housing, we will review our system based on the principle of reciprocity."

Lee Sangkyung, First Vice Minister of Land, Infrastructure and Transport, also addressed a question about whether reciprocity is specified in the Real Estate Transaction Reporting Act and whether it would be possible to pilot reciprocity with countries like the United States or China, where many citizens own homes in Korea, before expanding it to other countries. He explained, "We will review whether it can be reflected in the enforcement decree of the Real Estate Transaction Reporting Act."