DP’s temporary real estate policy fuels market confusion

Dec 22, 2021, 09:16 am

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Prime Minister Kim Boo-kyum reiterated his opposition to a proposal pushed by the ruling Democratic Party to temporarily postpone heavy taxation on owners of multiple homes. The photo shows the prime minister speaking during a meeting held at the Government Complex Seoul in Jongno-gu, Seoul, on Dec. 21, 2021./ Source: Yonhap News

AsiaToday reporter Hwang Eui-joong

Temporary policy after policy is being produced by the political circle ahead of next year’s presidential election, fueling market anxiety. The government’s inconsistent policy is straining credibility while controversy among the people over equity is growing.

According to the National Assembly and the government on Tuesday, the ruling Democratic Party (DP) is preparing a bill to delay imposing a heavy capital gains tax on owners of multiple homes when they sell their properties, despite opposition from the Cheong Wa Dae and the government. On Monday, the party also asked the government to prepare a plan to freeze next year’s property tax.

The DP’s move is aimed at easing the burden on property owners in belief that it could decide the winner of the upcoming presidential election next March. The party believes it should not ignore the public anger caused by a major tax hike for homeowners due to a rapid rise in housing prices, in order to win the election.

The property tax freeze is highly likely to last for one year. However, the government is opposed to the easing of heavy capital gains tax, unlike the property tax.

While the easing of the property tax is a temporary measure, the disagreement between the government and the ruling party over the heavy taxation is causing confusion in the market.

“I had no choice but to sell a house this year because of the property tax burden, but only those who have sold their house believing in the government’s policy became fools,” said a citizen who recently sold a house. “The retroactive benefit should be given to everyone.”

In online real estate communities, many wrote comments like, “Eventually it was good for me to own it and not to sell it,” “The one who endures without listening to the government wins,” and more.

Amidst policy changes, market players are confused. The buying trend has contracted due to loan regulations and interest rate hikes amid policy variables, making it difficult to make a transaction, industry observers say.

Experts warn against patch measures ahead of the election.

“If the government keeps changing its policy, its credibility will be inevitably damaged,” said Seo Jin-hyung, head of the Korea Real Estate Society. “It will be difficult to stabilize house prices unless the government comes out with a prudent, predictable and sustainable policy.”

#Democratic Party #real estate #tax