Previous government target ‘90% market price’ revision work
Let’s look at it from the beginning instead of reorganizing and disposing of it.
Pressure on public opinion in the metropolitan area ahead of the general election
This year, the Yoon Seok-yeol government was unable to confirm to what extent the publicly announced real estate prices would be raised to market prices. Previously, the government lowered this year’s publicly announced price realization rate (ratio of publicly announced price to market price) to the 2020 level and has been working on revising the roadmap established by the Moon Jae-in administration (realization rate 90%, market price over 1.5 billion won, 2025). Unable to decide whether to revise or abolish the actualization rate, they turned to a ‘complete review’. Some analysts say that they may be trying to postpone the issue of publicly announced prices, which will be sensitive to public opinion in the metropolitan area ahead of the general election.
On the 20th, the Ministry of Land, Infrastructure and Transport held a ‘Public Hearing on Real Estate Public Price Realization Plan’ at the Korea Real Estate Board’s Gangnam Branch in Seoul. Song Gyeong-ho, an associate researcher at the Fiscal Policy Research Department of the Korea Institute of Public Finance, who gave the presentation, emphasized a fundamental reexamination, saying, “In the current publicly announced price realization plan system, a fundamental solution cannot be achieved with only partial improvements such as lowering the realization rate and extending the target achievement period.”
However, regarding the announced price next year, he said, “There is a need to take separate measures that take into account domestic and foreign economic conditions and alleviation of the burden on the public.” The Ministry of Land, Infrastructure and Transport plans to announce the actualization rate of publicly announced land prices for next year soon.
As a result, the government is expected to scrap the Moon Jae-in administration’s roadmap and raise the publicly announced land price to the operating table to ease the real estate ownership tax burden. Initially, it was expected that the public hearing would lower the final target for the realization rate from 90% to 80% and extend the target achievement year to 2040, but they declared that they would look at it from a zero base. Lee Yu-ri, head of the real estate evaluation department at the Ministry of Land, Infrastructure and Transport, said, “We judged that it would be difficult to address the issues raised so far with only partial revisions,” and added, “We will keep all alternatives open and review them.” Accordingly, it is expected that it will take a considerable amount of time before the final draft is released.
At the public hearing, the idea of abolishing publicly announced prices was also raised. Su-yeon Jeong, professor of economics at Jeju National University, said, “The publicly announced price realization rate has become a ‘tool for tax increase’ that does not require the consent of the National Assembly,” and emphasized, “Because it is a tax increase roadmap, not a roadmap for the realization rate, it should be discarded, and if not possible, at least frozen.”
The real estate disclosure system is a system that announces appropriate prices for apartments, single-family homes, and land as of January 1 every year. It is used as basic data for calculating comprehensive real estate tax, property tax, and health insurance premiums. The Moon Jae-in administration announced a roadmap to raise the publicly announced price, which is far from reality, to 90% of the market price. However, as the burden of ownership tax increased due to a surge in publicly announced prices, it faced political backlash. According to the existing plan, it was estimated that the property tax burden for housing would increase by about 34% unless there is a tax reform. Last year, due to the decline in housing prices, a reversal phenomenon occurred in some regions where the publicly announced price was higher than the market price.
Reporter Ok Seong-gu