At the "citizens' grand debate for normalizing real estate," hosted by the Seoul city government on the 6th, many citizens and experts said it was "hard to know what the policy goal is" in the government's Aug. 3 tax overhaul. They said it was unclear what policy objective the decision to apply heavy taxation to owners of high-priced dwellings in southern Seoul's Gangnam and to non-resident single-dwelling holders is meant to achieve.
They said it was hard to tell whether the purpose of such policies is to stabilize home prices or to collect more taxes to achieve an asset redistribution effect. Some also said it was "violence rather than policy," or likened it to "Don Quixote fighting windmills, mistaking a nonexistent, imaginary enemy."
At the debate, Kim Ji-yeob, a professor in the department of architecture at Sungkyunkwan University, said of the government's real estate policy, "Is lowering home prices the (so-called) normalization of real estate? If you strengthen the tax regime on ultra-high-priced dwellings, do prices fall?" He went on, "If, as the government claims, prices fall and asset value keeps declining, no one will want to buy—does the government call that normalization?" He noted that a policy to lower prices through taxes is, in the end, a policy to reduce demand for purchasing dwellings, and that while pushing such a policy, telling people to buy homes for actual residence is unlikely to gain public support.
Kim also said, "(The government) is Don Quixote fighting with tremendous force. The foe is elsewhere, but it fights windmills," adding, "We need policies for the hungry and for working people, but it is making policies for the envious."
Kim Jun-yong, head of the Seoul Urban Renewal Association, said, "Many older people who cannot cover living expenses with the national pension and the like rent out their homes and live on the rent. And when their health fails, they need to move in with their children," adding, "Imposing heavy property and capital gains taxes (because they rent or do not actually reside) is closer to violence than policy." Kim said, "Diagnosis and prescription matter, but (the government's policy) is like diagnosing an athlete's foot as a diabetic foot and cutting it off."
Kim Je-kyung, head of Toomy Real Estate Consulting, said, "The government's tax policy has an uncertain or no purpose," adding, "Until the tax overhaul was announced, people were saying it was Moon Jae-in administration season two, but after the announcement, it clearly became Lee Jae-myung administration season one." He said, "At least the Moon administration did not touch existing end users such as long-term holders and seniors, but the current administration, without regard to when they acquired the property, says they enjoyed excessive benefits and is pushing them to sell because their capital gains are large."
He also said, "If you regulate dwellings such as ultra-high-priced dwellings by value, then you should lift regulations on the number of owned dwellings so that people can dispose of high-priced dwellings in Gangnam and buy dwellings in northern Seoul or in the provinces," adding, "(Regulating both value and number of dwellings) is nothing but tying down someone's arms and legs to torment them."
Yoon Ji-hae, head of the Research Lab at Real Estate R114, said, "The president said that a single 'smart' home is now the cause of rising prices," adding, "If so, the tax revision should include measures to dismantle the single 'smart' home structure, but by tightening the residency requirement for one household with one dwelling, it actually strengthened the preference for a single 'smart' home."
Seoul Mayor Oh Se-hoon also said, "I had hoped the government's tax code revision would be a solution to the real-life struggles of working people who cannot secure jeonse or monthly rentals, but the goal was to cause pain to those living in high-priced apartments in Gangnam," and asked, "From the perspective of working people, what practical, real effect does this have?"
He went on, "It is a basic human desire to end one's life where one has lived and to face old age there," adding, "The policy goal should be for the state or local governments to make that comfortable, but is it desirable to nudge people to sell and move out if their cash flow is poor where they currently live?" Oh added, "Claiming to rein in real estate, they are rolling out policies that infringe on humans' primal pursuit of happiness—how can that win public support?"