South Korea tries to tame rampant real estate market

Seoul

SINCE President Moon Jae-in took office in 2017, Seoul housing affordability has deteriorated to the worst on record despite tougher mortgage restrictions and new real estate taxes.

The Moon administration announced 23 separate set of measures to cool home prices in the past three years, but is facing criticism that the measures are hurting those less well off.

Below are the key real estate market policies:

2017

In 2017, the government tightened loan limits for home buyers to 40 per cent of a property's value from 70 per cent in phases for most of Seoul and its outskirts.

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Debt repayments were limited to 40 per cent of annual income in selected regions, down from 50 per cent.

Capital gains taxes were increased by 10 percentage points, and those who owned more than three homes were slapped with a 20 percentage point increase.

In December 2017, the government announced plans to cut capital gains taxes for homeowners who register themselves as renters to increase market supply.

2018

The government designated more parts of Seoul as speculative zones subject to tightened mortgage rules and announced plans to raise tax rates on ownership of properties valued over 600 million won (S$693,125).

It proposed relaxing restrictions on the floor area ratio in Seoul's business districts to build more homes, and vowed to develop land for building 300,000 new homes.

2019

The government announced plans to build new satellite cities near Seoul, at Goyang and Bucheon, and placed a price cap on sales of new developments in parts of Seoul.

In December, the government further tightened mortgage rules for high-valued homes, and banned mortgage lending on properties valued over 1.5 billion won.

2020

In addition to Seoul, pockets of Gyeonggi-do province surrounding the capital are designated as "speculative zones" subject to tougher borrowing rules including a mortgage ban on properties valued over 1.5 billion won.

The government also said it would increase capital gains tax and other taxes on property ownership by corporations.

In its latest set of measures, the government on Tuesday said it will supply more than 132,000 new homes in Seoul till 2028 by easing building height limits and converting military sites and other state-owned properties into residential areas. REUTERS