Official Real Estate Price Actualization Rate to Be Frozen at 69% Next Year... Final Decision This Afternoon [Real Estate AtoZ]

Ministry of Land Hosts "Public Hearing for the Improvement of Real Estate Official Price Policy"
Central Real Estate Price Disclosure Committee to Review and Approve Government Plan

The government has effectively finalized a plan to freeze next year’s officially announced real estate prices at 69% of market value. According to the "Real Estate Price Actualization Plan" established by the Moon Jae-in administration, the actualization rate for next year should have risen to 80.9%. However, due to growing concerns over a sharp increase in tax burdens, the rate will be maintained at the same level for the fourth consecutive year.

A Practical Decision Considering Tax Burden

Experts are speaking at the "Real Estate Price Disclosure Policy Improvement Public Hearing" held on the 13th at the Korea Real Estate Agency Seoul Gangnam Branch in Seocho-gu, Seoul, hosted by the Ministry of Land, Infrastructure and Transport and the Korea Research Institute for Human Settlements to discuss the adjustment plan for the actualization rate of publicly announced real estate prices. Photo by Yonhap News Agency

On November 13, the Ministry of Land, Infrastructure and Transport held a "Public Hearing for the Improvement of Real Estate Price Disclosure Policy" together with the Korea Research Institute for Human Settlements at the Korea Real Estate Agency Seoul Gangnam Branch in Seocho-gu, Seoul, and presented this plan. The actualization rates for land and single-family homes are also expected to be frozen for the fourth year at 65.5% and 53.6%, respectively.

Park Cheonkyu, Head of the Housing and Real Estate Research Division at the Korea Research Institute for Human Settlements, stated in his presentation on "Measures to Develop Real Estate Price Disclosure Policy," "The current market reflection rate should be maintained for one year, and a management system should be operated to continuously reflect market fluctuations." He proposed keeping next year’s officially announced prices for multi-unit housing, single-family homes, and land at this year’s levels, which can be interpreted as an adjustment plan that takes into account the potential tax burden resulting from changes in official prices.

The officially announced real estate price serves as the basis for calculating about 60 types of taxes and charges, including property tax, comprehensive real estate tax, health insurance premiums, and basic pension. Raising the actualization rate would directly increase the financial burden on the public. This could also suddenly increase the burden on low-income groups, such as elderly pensioners or basic pension recipients.

Tax Burden on Seoul Gangnam and Hangang Belt Apartments Unavoidable

However, even if the actualization rate is frozen, the holding tax burden for apartments in Seoul’s Gangnam and Hangang Belt areas is expected to increase significantly. This is because market prices in these areas have risen sharply in recent times. Even if the 69% actualization rate is applied as is, the officially announced price will inevitably rise if the increase in market prices is reflected.

The Korea Research Institute for Human Settlements also presented an analysis based on simulations considering public acceptance, concluding that an annual adjustment speed of within 1.5% compared to the previous year is appropriate. Park explained, "The majority of the public believes that the officially announced price should move in line with actual transaction trends, and that adjustments should be gradual rather than abrupt." He added, "Applying a 1.5% adjustment speed to last year’s official prices confirmed that improving balance had no impact on the rate of objections."

The Ministry of Land, Infrastructure and Transport plans to convene the Central Real Estate Price Disclosure Committee later in the afternoon to review and approve the government’s plan for next year’s actualization rate. Jeong Jaewon, Director of the Real Estate Appraisal Division at the ministry, stated, "It is necessary to maintain the current market reflection rate next year," and added, "In the medium to long term, we will consider how to set the annual market reflection rate through policy research and studies."