SOUTH Korea has sharply lowered official reference housing prices for this year, which will result in a large fall in taxes for homeowners, as the government has been trying to put a floor under slumping property prices.

The finance ministry said on Wednesday (Mar 22) the reference prices, on which property taxes are calculated, have been set 18.6 per cent lower than last year on average — the fastest drop since the system was introduced in 2005.

As a result, property taxes on homeowners will likely be reduced by between 29 per cent and 39 per cent from last year, the ministry said, citing its simulation for single home-owners. Multiple home-owners usually pay heavier taxes.

The ministry said the drop in reference prices was in part a result of the recently falling housing prices, which official data shows have fallen for the past nine consecutive months amid rising inflation rates and a cooling economy.

The government has taken a series of measures to tame the pace of declines in housing prices to avert a hard landing of the property market. REUTERS