The government is expected to announce measures to supply dwellings to stabilize housing prices by September at the latest. Plans to accelerate the development of the 3rd new town and utilize idle land in the metropolitan area and old public buildings in the city center are expected to be key elements. The types of public dwelling supply are also expected to be specified.
The upcoming announcement, which will be the first real estate measure of the Lee Jae-myung government, may include some tax measures, but it is reportedly unlikely to include comprehensive tax measures that can fully suppress housing demand. However, there is a possibility that financial regulatory measures, such as mortgage loans, may be added depending on household debt trends.
Minister Kim Yoon-deok attended the Strategy and Finance Committee meeting at the National Assembly in Yeouido, Seoul, on the 19th and said, "We are aiming to announce it as early as August," adding, "However, if the practical coordination takes more time due to the presidential trip next week, we can announce it by early September at the latest, and we believe we can announce it."
The real estate measures to be announced by the Ministry of Land, Infrastructure and Transport are expected to focus on dwelling supply. Since the new government has suppressed housing demand with the June 27 household debt measures that limited mortgage loans to 600 million won, it is anticipated that this new measure will include signals that there will be sufficient dwelling supply in the real estate market.
Minister Kim stated about the June 27 household debt measures that he views them as "a partial remedy for the real estate market" and diagnosed them as "measures used to suppress demand." He further noted, "I think more meticulous and stable preparations are needed when announcing the dwelling supply issue," and added, "The Ministry of Land, Infrastructure and Transport is preparing various proposals."
It is expected that the Ministry of Land, Infrastructure and Transport will announce measures to accelerate the supply of the 3rd new towns and increase the dwelling supply speed of existing measures. Utilizing idle land in urban areas or old public buildings to supply public dwellings is also expected to be included.
The Ministry of Land, Infrastructure and Transport's real estate measures may include policies related to taxation, but it seems unlikely that the high-intensity real estate tax reform expected by the market will be implemented. Minister Kim said regarding whether tax-related content will be included in future announced real estate measures, "For now, the supply measures are the main focus," adding, "If there are financial issues related to tax benefits, we may discuss and include some content in consultation with relevant ministries." He also added, "The Ministry of Land, Infrastructure and Transport is taking the lead in preparations, but we recognize that coordination with other ministries is an important issue," emphasizing that it is a process of coordinating with several ministries.
A member of the Strategy and Finance Committee of the National Assembly stated, "Because of the trauma from the Moon Jae-in administration, I understand that the tax policy will not be used extensively," and explained, "The Ministry of Economy and Finance did not address any part related to real estate taxes in their work report."
Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol also pointed out during the full meeting of the Strategy and Finance Committee held at the National Assembly that the plan to restore the eased real estate taxes from the previous government was not included in the upcoming tax reform plan, saying, "We will comprehensively assess the various situations," and added, "I have no intention to operate economic policy according to political circumstances."
However, since the government does not evaluate that Seoul apartment prices have entered a general declining phase, measures related to loans and other financial aspects are expected to be included. Presidential secretary Kang Hoon noted at the senior secretaries meeting the previous day, "It is necessary to pay attention to the fact that the steadily declining Seoul apartment sale prices showed a temporary increase in the first week of August," and instructed, "Check the trends in household debt and the real estate market situation, and if necessary, consider implementing high-intensity measures that include dwelling supply plans."
The Ministry of Land, Infrastructure and Transport and financial authorities are reportedly reviewing plans to include additional strengthening of the loan-to-value ratio (LTV) for housing in regulated areas as part of the real estate supply measures. Depending on the pace of household debt increase, there is a possibility that the strengthening of LTV in regulated areas, adjustments to risk weights for mortgage loans, and reductions in jeonse loan supply may also be added.
An official from the Financial Services Commission stated, "There are still no confirmed details."