The Ministry of Land, Infrastructure and Transport is reviewing plans to raise real estate official prices to match market prices. This decision reflects the judgment that it cannot continue the measures to suppress the rise in official real estate prices pursued by the Yoon Suk-yeol administration.
Previously, in 2020, the Moon Jae-in administration introduced the 'roadmap for the realistic adjustment of official prices' to reduce the significant gap between official prices and market prices. The roadmap aimed to gradually raise official prices to 90% of market prices by 2030 (based on apartment complexes).
However, after the Yoon Suk-yeol administration took office in 2022, the roadmap was discarded, and over the three years from 2023 to this year, official prices have not seen significant increases. Nonetheless, the current administration holds the position that it is inappropriate to keep official prices at a low level while market prices are rising significantly. Official prices serve as the basic data for the imposition of taxes such as property tax and comprehensive real estate tax. They are also used as criteria for administrative purposes, such as calculating health insurance premiums and selecting recipients for the basic pension and basic livelihood guarantee.
According to the Ministry of Land, Infrastructure and Transport and others on the 5th, the government has decided to raise the official prices to match market prices by 2026 and is reviewing the upward level of the realistic adjustment rate. The realistic adjustment rate indicates how much the official prices reflect actual market prices. For instance, if the market price is 2 billion won and the official price is 1 billion won, the realistic adjustment rate is 50%. This year, the realistic adjustment rate for apartments and other apartment complexes and land is around 60%, while the rate for single-family homes is around 50%.
The government's decision to raise the realistic adjustment rate for official prices to match market prices signifies an intention to reuse the 'roadmap for the realistic adjustment of official prices' discarded by the Yoon Suk-yeol administration. The roadmap had planned to gradually raise official prices to 90% of market prices by 2030 (based on apartment complexes). However, the Yoon Suk-yeol administration announced the termination of the roadmap after taking office and has maintained official prices at the level of 2020 over the past three years using the 'revised realistic adjustment plan.' Consequently, the official price for apartment complexes, which was to rise to 78.4% of market prices this year, has been set at 69.0%. Additionally, the official prices for single-family homes and land have also maintained the realistic adjustment rates of 53.6% and 65.5%, respectively, from 2020.
After internal discussions, the government plans to set a certain level of increase for the realistic adjustment rate and establish its position as a guideline, which will be communicated to the Central Real Estate Price Publicity Committee, which includes external experts. Between October and November, the Central Real Estate Price Publicity Committee will deliberate and finalize the realistic adjustment rate based on this information. Regarding the realistic adjustment of official prices, a government official noted, 'We see November as the deadline' and added, 'We plan to make decisions based on internal review and market conditions.' An expert also mentioned, 'Meetings to determine the government's position regarding the adjustment of official prices will be ongoing since August.'
If official prices rise according to the government's policy, the amounts of various taxes imposed will also increase. It is also expected to have an impact on the selection of recipients for the basic pension and basic livelihood guarantee. An industry official stated, 'President Lee Jae-myung said he wouldn't control housing prices through taxes, so the tax laws (rates) won't change, and the only way to collect more taxes is through the realistic adjustment of official prices,' and added, 'By raising official prices, the base for tax imposition increases, allowing more taxes to be collected without raising the tax rates.'
The Ministry of Land, Infrastructure and Transport has stated that 'nothing has been reviewed' regarding the plan to raise real estate official prices.