Experts emphasize that the government's easing of loan restrictions is essential for revitalizing the real estate market this year. They also advised that legislation to promote maintenance projects such as reconstruction and redevelopment is an urgent task to increase the supply of dwellings in the future.
According to the results of a survey on the '2025 Real Estate Market Outlook' conducted by CHOSUNBIZ with 20 real estate experts on the 3rd, 65% of respondents (13 people, multiple answers allowed) said that the government should improve loan regulations.
The government is tightening loans by applying an additional charge on housing mortgage loans and credit loans from banks, as well as other financial institutions, under the second phase of the total debt service ratio (DSR) regulations, which will be implemented starting September 2024. This means that it is necessary to ease the policy regulating real estate-related loans by adding the additional charges for the demand in the real estate market to revive.
Professor Seo Jin-hyung of Kwangwoon University noted, 'Most demanders need to use financing from financial companies to trade real estate, but tightening loan regulations has caused a sharp drop in transactions,' adding that 'the most important factor for revitalizing market demand and transactions is the easing of loan regulations.' Park Hap-soo, a concurrent professor at the Graduate School of Real Estate at Konkuk University, also said, 'Loan regulations are the most powerful demand suppression measure, leading to a significant contraction in purchasing power,' stating that easing loan regulations is necessary for recovering real estate transaction volumes.
There were also opinions on easing the regulations on the Dimeole loan policy for home purchasers. The government mandated that, starting in December last year, anyone using the Dimeole loan to purchase apartments in the metropolitan area would receive a maximum of 55 million won in priority repayment amount deduction (so-called 'bypass deduction') from the loan limit, while prohibiting post-purchase mortgage loans (loans for apartments not yet registered before completion). Previously, those enrolled in the Korea Housing Finance Corporation's mortgage credit insurance (MCI) or mortgage credit guarantee (MCG) were exempt from the bypass deduction obligation.
Ham Young-jin, head of the real estate research lab at Woori Bank, said, 'Since the Dimeole loan is an attractive funding tool for home purchasers, it will be necessary to relax regulations such as the mandatory bypass deduction and prohibition of post-purchase mortgage loans that the government is implementing for the revitalization of the real estate market.'
There were many opinions suggesting that the regulations on redevelopment and reconstruction should be eased to ensure housing stability and expand the supply of dwellings for actual demanders. To improve the real estate market in 2025, 60% of respondents pointed to the need for the passage of legislation related to promoting reconstruction and redevelopment, such as the abolition of the capital gains recovery system.
The capital gains recovery system recovers taxes when a member earns more than an average of 80 million won from reconstruction projects. The Yoon Suk-yeol administration officially promoted its abolition, and at the end of last year, a revised bill was passed through the National Assembly, raising the tax brackets and increasing the reduction rate for long-term homeowners. However, the ruling party proposed a bill on June 5, stating that the capital gains recovery system should be completely abolished. Yet, discussions regarding the abolition of the capital gains recovery system in the National Assembly have not taken place so far.
Additionally, the 'Special Act on Promoting Reconstruction and Redevelopment Projects' that can shorten the maintenance project period by handling the project implementation plan and management disposition plan simultaneously, as well as the 'Revised Urban and Residential Environment Maintenance Act' that reduces public contributions during reconstruction, have also been proposed but discussions in the National Assembly have been halted.
Song Seung-hyun, CEO of City and Economy, remarked, 'The longer the maintenance project period extends, the more costs rise, making it difficult to respond to inflation and easily losing project momentum,' adding, 'It is necessary for the National Assembly to pass legislation to support maintenance projects.'
※Survey target: 20 experts (in alphabetical order)
Go Jun-seok, head professor at Yonsei University's Sangnam Business School; Kwon Dae-jung, professor of real estate at Sogang University Graduate School; Kim Kyu-jeong, head of the Asset Succession Research Institute at Korea Investment & Securities; Kim Seong-hwan, researcher at the Korea Construction Industry Research Institute; Kim Eun-sun, lead at Zigbang's Data Lab; Kim Je-kyung, head of Two-Me Real Estate; Kim Jin-yu, professor of urban transportation engineering at Kyonggi University; Kim Hyo-seon, chief commissioner of NH Nonghyup Bank's real estate division; Park Won-gap, chief commissioner of KB Kookmin Bank; Baek Kwang-je, researcher at Kyobo Securities; Seo Jin-hyung, professor at Kwangwoon University; Song Seung-hyun, CEO of City and Economy; Song In-ho, head of the Economic Information Center at KDI; Shim Hyung-seok, head of Woori-Bbang Research Institute; Woo Byung-tak, commissioner at Shinhan Bank Premier Pathfinder; Yoo Seon-jong, professor at Konkuk University; Yoon Ji-hae, chief researcher at Real Estate R114; Lee Eun-hyung, researcher at the Korea Construction Policy Research Institute; Cho Young-kwang, researcher at Daewoo Construction; Ham Young-jin, head of the research lab at Woori Bank.