Table of Contents
- Overview of the Democratic Party's Lee Jae-myung's Real Estate Policies and Market Impact Analysis
- Expansion of Supply Centered on Basic Housing and Public Housing
- Introduction of Land Ownership Tax and Regulation of Multi-homeowners
- Maintenance of Development Profit Recovery System and Three Rental Laws
- Financial Policies Focused on Actual Users
- Approach to Regional Balanced Development and Polarization
- Conclusion
Overview of the Democratic Party's Lee Jae-myung's Real Estate Policies and Market Impact Analysis
Candidate Lee Jae-myung of the Democratic Party has set real estate issues as a key national agenda in the presidential and general elections. He has shown his willingness to solve these issues by presenting strong policies such as basic housing, public housing, land ownership tax, and reform of the comprehensive real estate tax.
He aims for a housing market overhaul that considers actual users under the belief that "profits cannot be expected from real estate." During the 2024 general election, when the Democratic Party won, he had previously shared related content on his blog.
In this post, I will comprehensively examine the key pledges and policies of the Democratic Party and candidate Lee Jae-myung in the recent presidential and general elections, and their impact on the real estate market.
In particular, I will analyze the changes that factors such as housing prices, the Jeonse market, and investment sentiment may experience. I plan to address the impact on the South Korean economy if candidate Lee Jae-myung is elected president in a separate post.
Expansion of Supply Centered on Basic Housing and Public Housing
Candidate Lee announced during the last presidential election that he would supply 3.11 million housing units nationwide, including 1.07 million units in Seoul. The core of this pledge is to provide 1 million units of basic housing, which is high-quality lifetime rental housing that anyone can apply for, and this policy is expected to bring significant changes to the existing housing supply methods.
He plans to develop and supply large-scale public land in major areas of Seoul, such as transportation hubs and near airports, but concerns have been raised regarding funding procurement and the pace of project execution. These issues are expected to play an important role in future policy implementation.
Expanding public supply helps increase long-term housing stability. However, in the short term, the impact of supply on the market may not be immediate. This is a problem caused by the time lag in supply.
Introduction of Land Ownership Tax and Regulation of Multi-homeowners
The candidate proposed a tax reform plan in previous elections to raise ownership taxes while lowering transaction taxes, but has since retracted this stance. Specific pledges must be disclosed afterward for a clearer understanding.
The introduction of the land ownership tax is a policy to impose taxes on all types of land and housing, effectively taxing ownership itself. This is expected to limit the benefits of real estate ownership and prevent unearned income.
Such circumstances may lead to a contraction of the rental market, raising concerns about an increase in Jeonse and monthly rents. In particular, if multi-homeowners are burdened with excessively high tax obligations, the supply of rental housing may decrease.
Maintenance of Development Profit Recovery System and Three Rental Laws
The candidate plans to strongly push for a measure that returns profits gained from development to the public. Learning from the Daejang-dong incident, he has stated that he will adhere to the principle of returning profits generated during the permitting process to the people. Accordingly, it appears that regulations on private development will be strengthened and public-led development will be expanded.
Furthermore, the three rental laws: contract renewal request system, limit on Jeonse and monthly rent, and mandatory reporting for Jeonse and monthly rent will continue to operate, but it is expected that supplementary measures to minimize confusion on the ground will be implemented. While strengthening tenant protection to enhance stability is positive, concerns about reduced supply from landlords remain.
Recently, a controversy arose when the Democratic Party announced a revised rental law guaranteeing a 10-year Jeonse. In response, Lee Jae-myung expressed his opposition, stating that the policy is "undesirable."
Financial Policies Focused on Actual Users
The candidate's pledges concerning real estate and financial policies focus on support for housing purchases for youths and newlyweds. He proposed raising the LTV ratio and reducing acquisition taxes for those buying their first home.
On the other hand, he has stated that he will move towards strengthening financial regulations against speculative forces such as multi-homeowners and corporations. This two-track strategy is expected to positively reshape the market structure to focus on actual users. However, there is a possibility that the buying sentiment may weaken in some regions.
Approach to Regional Balanced Development and Polarization
The candidate's real estate policy focuses on Seoul and the metropolitan area. However, plans to improve the living environment of provincial cities through urban regeneration and expansion of public rentals are in the works. Additionally, there is a high likelihood of proposing legislation to move the administrative capital to Sejong, which is expected to be adopted as a presidential pledge.
The provincial real estate market may see minimal effects due to population decline and structural problems in the local economy. Furthermore, if acquisition tax regulations on multi-homeowners continue, it will become even more difficult to revitalize the provincial real estate market.
In March, Lee Jae-myung visited Busan for the first time in a year but did not address important local issues such as the establishment of a special law for Busan as a global hub city and the relocation of the Korea Development Bank to Busan. Attention is needed to whether new pledges related to regional balanced development will be presented in the future.
Conclusion
Examining candidate Lee Jae-myung's real estate policies, he has set market stability and strengthened public interest as his main goals. He shows determination to support actual users while strengthening regulations against multi-homeowners and suppressing speculative demand.
Additionally, through measures such as expanding supply, strengthening holding taxes, improving rental systems, and easing financial policies, strong signals are expected to be sent to the market. However, the feasibility of these policies, market reactions, and funding procurement issues remain challenges that need to be addressed in the future.
If the policies are implemented in earnest, the real estate market in South Korea is likely to undergo short-term adjustments and stabilize in the long term. Consequently, the "one good property" strategy will become more prominent, and polarization between the metropolitan area and the provinces is expected to deepen.
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