Civic group slams government real estate policy as 'hollow,' urges review

A South Korean civic group has strongly criticized the government's recent real estate policies, labeling them as "hollow" measures that fuel market overheating. The Citizens' Coalition for Economic Justice (CCEJ) held a press conference on August 18th in Seoul to denounce the "August 3rd Tax Reform Plan" and the "August 13th Real Estate Measures." The group argued that instead of stabilizing housing prices and ensuring affordable housing for citizens, the policies offer preferential treatment to private developers and only provoke market instability.

CCEJ specifically criticized the public housing models proposed in the August 13th supply measures, such as the "equity accumulation type" and "profit-sharing type" public housing. They argued these models, like existing public sales, are structured to burden buyers with debt by not lowering the actual housing price. Instead, they only reduce initial entry costs by allowing gradual equity acquisition or by sharing future sales profits with the public. To address this, CCEJ demanded the full adoption of "land-lease housing," where the public owns the land and only the building is sold, thereby reducing supply costs by 30%.

The group also targeted policies aimed at expanding the supply of new homes purchased by landlords and easing building regulations for non-apartment buildings like villas. CCEJ expressed concern that these measures, which benefit private developers, would ultimately distort the market. "One of the biggest problems with the government's real estate policy is that the government relies on purchasing existing homes rather than building them directly," CCEJ stated. "It should build homes directly and sell only the buildings to minimize negative market impacts."

Regarding the real estate tax reform, CCEJ evaluated President Lee Jae-myung's commitment to reform as insufficient, contrasting with his past strong statements. The group argued that raising the comprehensive real estate tax (종부세) threshold for single-home owner-occupiers from 1.2 billion won to 1.4 billion won (based on official prices) could cause a "balloon effect," driving up prices of apartments below 1.4 billion won (market value of 2 billion won) that were previously exempt. CCEJ also pointed out that the temporary easing of capital gains tax surcharges for multi-home owners in regulated areas and the slight increase in the fair market value ratio (from 60% to 70-80%) contradict the previous real estate policy direction of the Lee Jae-myung government.

Highlighting that Seoul apartment prices rose 14% and rent prices increased by 8-9% during the first year of the Lee Jae-myung administration, CCEJ demanded specific actions. These include supplying all 18,000 public housing units in the second half of the year as land-lease housing, abolishing the new construction purchase agreement system and expanding purchases through auctions, withdrawing preferential treatment for redevelopment projects, and abolishing the fair market value ratio for the comprehensive real estate tax, along with a review of the tax reform plan.