Time for a fast conclusionAfter losing the by-elections by a landslide, the ruling Democratic Party (DP) is pushing to reverse its hard-line real estate policy. It launched a special committee to address complaints over real estate issues. Rep. Yun Ho-jung, its floor leader acting as interim leader, said the party can discuss with the opposition People Power Party (PPP) to better reflect real home-seekers. DP Rep. Kim Byung-wook, a member of the National Assembly Political Affairs Committee, has motioned revisions to the Comprehensive Property Tax and Ownership Tax Acts.
The revisions propose to ease taxes on single-home owners and ease loan regulations on real home seekers without homes. The ownership tax threshold is proposed to be raised to 900 million won ($806,000) on appraisal value from the current 600 million won. The threshold on Comprehensive Property Tax could be raised to 900 million won in appraisal value. The DP’s policy chief Hong Ik-pyo said the comprehensive tax aiming higher levies on the rich has broadened to the middle class as a result of spikes in home value.
The dramatic softening comes after the DP’s crushing defeat in the mayoral by-elections in Seoul and Busan on April 7. Deputy Prime Minister for Economic Affairs Hong Nam-ki admitted the government was reexamining regulations to reflect public sentiment expressed in the by-elections.
The government and DP should fix the appraisal value measurement. Mayors and governors of the PPP have filed a complaint over the system and demanded the central government authorize local governments to set the appraisal value in their jurisdictions.
Action must follow swiftly. The DP had proposed to ease the comprehensive property tax on single homeowners ahead of the April 15 parliamentary elections last year but did not act out after the election. Assigning Jin Sun-mee, chairwoman of the parliamentary committee on land, infrastructure and transportation, to head the new special committee on real estate, raises some worries. She had irked the public by saying public housing rental could help raise living standards if people give up their fantasy about owning apartments. The committee was launched in November but was disassembled without any work.
They must not send misleading messages to the housing market and unsettle it. Since conservative Oh Se-hoon returned as Seoul mayor, housing prices have risen for the first time in two months. Civic organizations also warn the sudden reversal in the government’s real estate policy could renew a speculative fever.