Ministry of Land Unveils Blueprint for Official Price Disclosure Reform
Limitations of Realization and Rationalization Plans Highlighted... Implementation Set for 2027
The government has decided to comprehensively overhaul the system for calculating officially announced real estate prices and implement the changes starting in 2027. The plan includes clarifying concepts that are not properly defined in current regulations and setting the market reflection rate in five-year cycles. Given that officially announced prices are closely tied to the daily lives of most citizens, the government will also expand verification centers nationwide to reduce public backlash.
On the 13th, the Ministry of Land, Infrastructure and Transport revealed the direction of the reform for the official price disclosure system at a public hearing on 'Improving Real Estate Price Disclosure Policies.' The Korea Research Institute for Human Settlements has already begun research on this project, with results expected around September next year. Park Cheonkyu, head of the Housing and Real Estate Research Division at the institute and the main presenter for the day, said, "The key elements to focus on are setting a long-term vision, establishing management indicators, and ensuring both acceptability and stability." He added, "We must enhance the acceptability and clarity of the system in line with public perception, so as to improve the stability and sustainability of the official price disclosure system."
Under the upcoming revised system, officially announced prices will be defined as 'policy prices reflecting market value.' The current Act on the Disclosure of Real Estate Prices (Real Estate Disclosure Act) refers to them simply as appropriate prices, but this has long been criticized as ambiguous. While the current calculation method-'market price × market reflection rate'-will be retained, the concepts of both market price and market reflection rate will be clarified. The market price will be characterized as the basic market value used to calculate the officially announced price, while the market reflection rate will serve as an indicator for the stable operation of the official price disclosure system.
This change is being made because the mixing of concepts in the past has led to contradictions even within the same law. Article 2 of the current Real Estate Disclosure Act defines the appropriate price as "the price that is most likely to be established in a normal transaction in an ordinary market." However, Article 26, Paragraph 2 of the same law states, "To ensure that the officially announced price reflects the appropriate price and (omitted) to ensure balance, a target for the market reflection rate of real estate shall be set (omitted)." In other words, one part of the law says the price should be appropriate, while another implies it is not, requiring artificial adjustment.
Director Park explained, "Ambiguity in interpreting the law has led to a logical flaw where the official price should be the appropriate price, but due to the concept of the market reflection rate, the official price fails to meet that standard."
In addition, even if officially announced prices are meant to reflect market value, the government has decided to comprehensively consider factors such as equity between regions. The limitations of realistically assessing market value were also taken into account. The government also recognized that changes to the official price disclosure system have often led to strong public backlash. To enhance acceptability, the annual adjustment rate will be tentatively capped at 1.5%. To improve stability and predictability, the government proposed setting the market reflection rate in five-year cycles, which correspond to the medium-term real estate cycle.
Both the realization rate plan introduced under the Moon Jae-in administration and the rationalization measures pursued by the Yoon Suk-yeol administration to overturn it were diagnosed as having limitations. The realization rate plan stipulated by law that the rate would gradually rise from 69.0% in 2020 (for multi-unit housing) to 90.0% by 2030. For single-family homes, the target of 90.0% was set for 2035. Critics said that such long-term plans, set 10 to 15 years in advance, were too rigid and failed to reflect changing market conditions. There were also instances where officially announced prices exceeded market prices, worsening the balance.
The rationalization measures attempted by the previous administration ultimately failed to materialize due to the inability to amend the law. This is also why public hearings were held annually to determine the market reflection rate. Director Park pointed out, "Whether tax burdens would increase or decrease in the future became a matter of public debate every year, heavily influenced by market conditions and public opinion about officially announced prices, which undermined the credibility of the system." He added, "Previously, long-term goals operated too rigidly, but recently, the lack of specific target setting has reduced the predictability of policy."
The government also plans to expand the Official Price Verification Support Centers, which have been piloted in some local governments, to a nationwide scale. Supplementary measures will be prepared for property types where price calculation is difficult due to infrequent transactions, such as ultra-high-priced homes, or for types like row houses and multiplex housing, which see relatively more objections. Director Park emphasized, "It is most important to establish the official price disclosure system as a more sustainable and stable system by considering public acceptability and strengthening the clarity of the system."
On the 13th, a public hearing for the improvement of real estate price disclosure policy is being held at the Seoul Gangnam branch of the Korea Real Estate Board in Seocho-gu, Seoul. Photo by Yonhap News
During the discussion that followed the presentation, a variety of opinions were exchanged. Kang Chunnam, an appraiser at Pacific Appraisal Corporation, said, "There were both concerns and expectations about whether the realization rate plan would be reinstated, but I was relieved to see today's announcement focus on public acceptability and stability. Ultimately, I believe the calculation of officially announced prices and tax policy should be separated."
Jo Jeongheun, Chair of the Land and Housing Committee at the Citizens' Coalition for Economic Justice, commented, "In cases where an apartment's transaction price rises by 1 billion won in a year, I question whether using data from just one or two transactions can truly reflect market value. The purpose of officially announced prices is to curb speculation and ensure fair taxation, but if they are determined by speculative demand, there needs to be more careful consideration and review."
Jung Suyeon, a professor at Jeju National University, took a clear stance against introducing new concepts like policy prices, citing concerns that it could increase taxpayer suspicion. Professor Jung referred to global standards used in property appraisal in countries such as the United States and the United Kingdom, and argued that the method for calculating officially announced prices should be disclosed more transparently. "If officially announced prices rise after next year, resistance to taxation will intensify, so clear justification is needed to persuade the public," she said. "As the saying goes, 'garbage in, garbage out,' so we need improvements to the disclosure system that ensure accurate input data."
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