April 9, 2024
SEOUL – President Yoon Suk Yeol on Monday touted his administration’s policy efforts as the reason behind the recent signs of the housing market stabilizing.
Yoon said his conservative administration will spare no efforts to further stabilize the housing market, as the interest rate and the cost of construction remain high, posing hurdles for the housing supply in Seoul, which is suffering a shortage of affordable housing for prospective homeowners.
“Now is the (optimal) time to normalize the housing market, given the time it takes for (the implemented policy) to lead to the actual house construction,” Yoon said during a meeting he presided over Monday, just two days before the general election with 300 legislative seats up for grabs.
“Now is the time for the government to step up and get rid of inadequate housing regulations completely and stimulate the housing supply to the greatest possible extent.”
According to Yoon’s office, citing the Korea Real Estate Board data, the price of a high-rise apartment in Seoul overall fell by 14.1 percent from May 2022 until February.
Moreover, Yoon’s office indicated that the cost of a citizen’s home averaged out to 10.7 years of their annual income as of 2023. The same set of data suggested that the price of a house equaled 13.4 years of annual pay on average in 2021.
These trends were attributable to the conservative administration’s efforts to alleviate homeowners’ property-related tax burden, manage household debt and cut the red tape for the reconstruction of old apartment complexes, according to Yoon.
The downward trend in prices in the country’s most populous city contrasts with the market overheating during the former Moon Jae-in administration. During Moon’s five-year tenure, house prices surged nearly twofold from May 2017 to April 2022, according to the presidential office.
Moon was the liberal president who preceded Yoon. The heated housing market across South Korea, coupled with stricter lending rules and taxation, often left him vulnerable to political attacks.
During Monday’s meeting, Yoon ramped up his criticism of the Moon administration’s taxation burden on property owners that had spillover effects on their tenants.
Yoon said the total amount of tax imposed on South Korean property owners — including property tax and comprehensive real estate holding tax combined — doubled to 10 trillion won ($7.4 billion) in 2022, from 5 trillion won in 2018.
The conservative leader also criticized the Moon administration’s move to deliberately inflate the officially assessed land price — a barometer for how a homeowner is taxed — by 63 percent during his tenure to narrow its gap with the market value of a specific property built on the land. Yoon added that his administration sought to slow down the speed of the rise in the officially assessed land price.
Tenants of these houses faced the heat, Yoon added, as their jeonse deposits — referring to a lump sum deposit that a tenant pays their landlord to rent their home for at least two years — surged in tandem, by 17.6 percent from 2020 to 2021.
As for ways to supply more affordable houses, the government pledged to speed up the process of the reconstruction of buildings, especially in Seoul’s older urban neighborhoods where single-family freestanding homes, called “dandok jutaek,” and low-rise apartment buildings, called “villa,” are commonplace, as a follow-up to Yoon’s “New Village Project” proposal announced during his 21st policy debate on March 19.
Yoon said Seoul will embark on the neighborhood renovation project next year, and the central government will closely coordinate with the Seoul municipal government, at the meeting where Seoul Mayor Oh Se-hoon was also present.