More than half of the areas that expected market revitalization after being newly selected as beneficiaries of the "second home" tax special case saw a decline in real estate transactions. Experts noted that attracting an industrial base and investing in infrastructure must go hand in hand to see policy effects.
According to the court's Registration Information Plaza on the 24th, the number of real estate sales, including non-residential, in Gangneung, Gangwon, last month fell 33.2% from the previous month. Among the four areas in Gangwon newly designated for the second home special case, both Donghae (-5.5%) and Inje (-37.5%) saw declines in sales, while only Sokcho (21.9%) increased.
In August, the government announced the "plan to reinforce construction investment centered on the provinces," which included expanding tax support for second homes. By expanding the "second home single-household single-home special case," which had originally applied only to 83 population-decline areas, to include non-capital population-decline watch areas, nine watch areas were newly covered: Gangneung, Donghae, Sokcho, and Inje in Gangwon; Iksan in North Jeolla; Gyeongju and Gimcheon in North Gyeongsang; and Sacheon and Tongyeong in South Gyeongsang.
Of these nine, three in Gangwon and Sacheon in South Gyeongsang (-11.9%) and Tongyeong (-60.3%) saw month-over-month declines in transaction volume. By contrast, transaction volume rose in Sokcho, Gangwon, as well as Iksan in North Jeolla (20.7%), Gyeongju in North Gyeongsang (43.1%), and Gimcheon (34.7%).
Sites with declining transaction volume say there are no purchase inquiries. A representative of A Realty in Naegok-dong, Gangneung, said, "There were brief inquiries after the announcement of the second home special areas, but it is quiet now. This situation has persisted for a long time."
Experts explained that second homes favor tourist and resort areas, creating transaction volume gaps due to differences in tourism infrastructure. Seo Jin-hyung, a professor in the Department of Real Estate Law at Kwangwoon University, said, "Second homes are typically chosen for tourism and resort purposes rather than residential, so demand appears to have concentrated in places with strong tourism infrastructure like Sokcho in Gangwon and Gyeongju in North Gyeongsang," adding, "The areas with declining transactions lack tourism infrastructure. In the case of Gangneung, Gangwon, the drought this year also cannot be ignored."
There are also concerns that as the preference for a single high-quality home deepens, the policy effect is too weak to solve provincial real estate issues. Song Seung-hyeon, head of Urban and Economy, said, "Even with tax support now, multiple-home owners have little practical benefit. Rather, buying one stable, high-quality home and holding it long term is more profitable, so the slump in provincial real estate continues." Song added, "To revitalize local real estate markets, nurturing local industries, attracting corporations, and activating infrastructure are necessary."
Meanwhile, the government is doubling down on the second home policy despite this situation. For population-decline areas, it expanded the official appraisal threshold for dwellings eligible for special cases on property tax, comprehensive real estate tax, and capital gains tax from 400 million won to 900 million won, and the acquisition price threshold for the acquisition tax special case from 300 million won to 1.2 billion won. Converting an official appraisal of 900 million won to market price yields about 1.3 billion to 1.4 billion won, so nearly all dwellings in the target regions are expected to qualify. The government plans to apply the relaxed standards starting next year through legal revisions within the year.