The Democratic Party of Korea's think tank, the Democracy Institute, said the real estate market is normalizing and proposed a policy direction to swiftly establish a "Real Estate Supervisory Service" and actively push legislation to overhaul the real estate tax system. On real estate taxation, it sketched a blueprint that, after the tax law amendment is announced at the end of July, a property tax overhaul for dwellings owned as of June 1, 2027 would apply to taxable homeowners, with the comprehensive real estate tax to be collected in December, bolstering the case for higher property taxes.
According to the political sphere on the 1st, the Democracy Institute recently published a policy briefing report titled "[Special issue-16] Wise local elections ④ Real estate, is this the period?"
The Democracy Institute advised that the establishment of the Real Estate Supervisory Service should be actively pursued. The Real Estate Supervisory Service is an agency dedicated to investigating illegal real estate transaction activities. It is also a presidential campaign pledge of President Lee Jae-myung. Earlier in February, Democratic Party lawmaker Kim Hyun-jung introduced the "Act on the Establishment of the Real Estate Supervisory Service," and on Mar. 6, President Lee reviewed the legislative progress related to it. Under the introduced bill, the Real Estate Supervisory Service would serve as a control tower overseeing personnel from related ministries and agencies, including the Ministry of Land, Infrastructure and Transport, the National Tax Service, the Korean National Police Agency, and the financial authorities. The main elements include staffing of around 100 people, including special judicial police officers (special investigators) empowered to directly investigate illegal acts.
On the real estate tax system, it expressed a position of "possible active legislative push." A graphic attached to the report titled "Procedure for amending the real estate tax system" outlines the following steps: announcement of the tax law amendment at the end of July, passage of the amended tax law in December, application of property taxes to dwellings owners in January 2027, and collection of the comprehensive real estate tax in December. This is being interpreted as keeping in mind a hike in property taxes.
There is a growing sense that a property tax hike is likely after the local elections. Jin Sung-joon, a Democratic Party lawmaker who chairs the Special Committee on Budget and Accounts, said in a recent radio interview, "There is a considerable possibility it will be included in the July tax overhaul." In the market, the first option being discussed is subdividing the taxable base brackets (the basis on which taxes are levied) to increase the property tax burden on "ultra-high-priced, non-residential single-dwelling owners." The comprehensive real estate tax currently has taxable base brackets of ▲ 300 million won or less ▲ 600 million won or less ▲ 1.2 billion won or less ▲ 2.5 billion won or less ▲ 5 billion won or less ▲ 9.4 billion won or less ▲ over 9.4 billion won, and the idea is to further split, for example, the 2 billion–4 billion won range. There is also speculation that the tax rates themselves could be adjusted.
The Democracy Institute assessed that since President Lee issued a real estate-related message in January, the market has been entering a normalization phase. According to data the institute compiled using materials from the real estate platform Asil and the Korea Real Estate Board, the week-over-week apartment price increase rate in Songpa District, Seoul, fell from 0.31% as of Jan. 26, when President Lee said he would "correct the real estate concentration structure," to -0.09% on Mar. 2. Seocho District declined from 0.27% to -0.01% over the same period, and Gangnam District fell from 0.07% to -0.07%. It also said the government's four policies—"loans, regulations, taxes, and supply"—are showing a synergistic effect.