Lee Jae-myung, the president, held a news conference marking his first year in office at the Blue House state guesthouse on the 8th and said, "Korea's real estate holding tax is generally low," adding, "Fundamentally, we need to lower the expected rate of return." It effectively signaled the use of real estate tax policy.
On the surge in jeonse prices, he said, "The jeonse system is a unique private-finance scheme found only in Korea," adding, "It is distorting the market, and I think it may gradually disappear."
Asked about real estate policy that day, Lee said, "The most serious factor eating away at Korea's future growth potential is real estate speculation," criticizing that "(real estate speculation) undermines the desire to work, illegalities and loopholes run rampant, and in the end it distorts the entire structure of Korea's economy." He added, "Escaping from a republic of real estate speculation is the way for Korea to survive."
As a concrete solution, he mentioned the tax system. Lee said, "Korea's holding tax is generally low. Even if you buy up a lot, there is little burden," adding, "In other countries, if you hold real estate needlessly, it becomes a burden and disappears, and only those who need it hold real estate."
Lee said, "In Korea, even completely useless forest land costs tens of thousands of won," adding, "We need to fix this. We need to lower the expected rate of return."
Lee said, "Tax measures can only be done by July, and we will handle them all at once when we draft next year's budget," adding, "We are streamlining policies to increase supply, and we will finalize and announce measures to speed things up soon."
On the jeonse system, Lee also shared his view. Asked about the severity of the jeonse crunch and rising jeonse prices, Lee said, "Jeonse is a unique system found only in Korea and a kind of private finance," adding, "There was a time when borrowing jeonse funds and choosing jeonse instead of monthly rent was profitable, and this was distorting the market."
Lee said, "Heavy borrowing for jeonse was a main driver of rising home prices," adding, "(Jeonse) may gradually disappear."