Gov’t strives to stabilize housing prices
‘Anti-speculation zones’ expected
The government is considering measures to curb speculation as the housing market shows no signs of cooling.
Strong measures targeting those owning several homes, such as the designation of speculation restriction zones, are expected.
Despite government plans to curb housing prices announced on June 19, the market has been heating up.
According to Real Estate 114, a market information provider, apartment prices in Seoul have risen 1.26 percent on average since June 19. The pace of the rise is accelerating — the uptick was 0.41 percent last week, much higher than the 0.29 percent gain the previous week. In the second quarter alone, prices rose 2.69 percent, the steepest since the third quarter of the previous year.
“The June 19 measure got the spotlight as the first real estate market policy of the new administration,” Yun Ji-hae, a researcher at the agency, said. “However, it only temporarily pressured down the rise of Seoul apartment values. More than a month has passed, but it turns out to have had minimal effect.”
Yun noted that the recent rise is unusual because summer is traditionally a slow season for housing transactions.
Since stabilizing the housing market is one of the Moon Jae-in administration’s top priorities, market watchers expect additional measures to come.
In her inauguration speech, land minister Kim Hyun-mee hinted that those who own several homes will be the target.
She cited data on those who bought houses in May. Home purchases by those who previously had no house fell 6 percent in May but those who possessed five houses or more raised the price of their transactions 7.5 percent.
Kim also took issue with the soaring ratio of those in their 20s or younger among those who bought houses in the affluent Gangnam-gu.
“There is enough reason to suspect irregular transactions,” she said, suspecting real estate speculators are buying homes for their children.
“These young people, who are not likely to have accumulated enough assets, are purchasing expensive homes.”
She called the June 19 measures “the first warning by the government on speculators,” hinting that tougher measures will follow.
Measures previously implemented to curb housing prices include increasing capital gains tax on multiple homeowners and raising prop- erty taxes. But they were eased during previous administrations to stimulate the real estate market and boost the economy. On top of reintroducing such measures, the government has also been considering taxes on landlords for the monthly rent they get.
There could also be cooperation with the tax agency. National Tax Service Commissioner Han Seung-hee said that only 2.58 percent of the 1.87 million people who own multiple homes filed their income from rent.
He said the tax agency will consider a probe of multiple homeowners.
If the market continues heating up, the government may introduce measures such as the designation of speculation restriction zones. These were introduced in 2002, applying 14 regulations including partially restricting home transactions, but were scrapped when the market slumped.
The government may also require home buyers to report their funding plans in advance. The measure was scrapped in 2015. Experts say it would be effective in curbing demand.
“If the measure is introduced, those who cannot clarify where they got the money would have a problem in buying homes,” Yun said.
He said the government’s measure to curb household debt, scheduled for August, should also get attention.