South Korea imposes tougher taxes to curb price surge

Seoul

SOUTH Korea on Thursday laid out plans to impose tougher taxes on property ownership to rein in owners of expensive homes blamed for stoking a speculative housing bubble in the main regions across the nation.

The proposed 0.5 per cent to 2 per cent ownership tax that would kick in on properties valued over 600 million won (S$733,626) will be raised to 0.5 per cent to 3.2 per cent, a government statement showed.

Those who own more than three properties in zones where speculators have been active, including Seoul, could face a tax of up to 3.2 per cent, up from the current maximum rate of 2 per cent.

Rental home owners will face fresh mortgage restrictions, and the government will build 300,000 new homes in the metropolitan Seoul area to boost housing supply.

"The government is targeting speculators and are surely imposing more taxes for multiple home owners, while protecting single-home owners and the real demand," Finance Minister Kim Dong-yeon said at a press conference in Seoul.

"If property market shows destabilising signs again, (the government) will swiftly prepare necessary measures," he added.

The average price of an apartment in Seoul exceeded 600 million won for the first time in 2017, and has continued to surge despite President Moon Jae-in's capital gains tax hikes and tougher mortgage rules announced in August 2017.

Apartment prices in the South Korean capital have gained 6.9 per cent this year, logging the fastest price jump since 2006 and far outperforming the 1.2 per cent gain nationwide this year, data from KB Kookmin Bank showed. REUTERS