The Development of 2 or 3 New Town, the Second Kangnam

Korean government decided to establish two or three new towns of Kangnam size around Seoul to stabilize housing price. If a household with more than three housings sells market value will be applied instead of standard value, so the tax on conveyance in price fevering district will be imposed more than twice.

Additionally, to spread of educational demand for Kangnam district, special purposed high school, independent high school science high school, foreign language high school, etc will be led to establish Seoul metropolitan area.

At 4th, the government opened a meeting presided by Yun Jin-sik, Vice Minister of Ministry of Finance and Economy, with participation of 6 vice ministers of other ministries, and decided and announced ‘Housing Market Stabilization Policy’. It was the fourth time to announce stabilization policy for real estate market in this year.

The government analyzed the jump of the housing price in some districts of Seoul as the results of the housing shortage, so it will establish two or three new towns ‘the second Kangnam’ to disperse the demand for high quality housing.

The government will also impose conveyance tax by applying market value instead of standard value, if a household possessing more than three housings sells. The standard value is at 70% -80% level of actual value and is applied to the standard 12 months ago. So the conveyance tax for price fevering districts is expected to increase more than twice. The subject for the conveyance tax estimated more than 500 thousand households nationwide.

From the end of this month, in Seoul, Guachun and other 5 new cities, the condition for exemption of conveyance tax will be reinforced from ‘possessing more than 3 years’ to ‘possessing more than 3 years and residing more than I year’.

From the end of this year, In Seoul, Ilsan, Sanbon, Jungdong and Guachun, new constructed housing also becomes the subject to conveyance tax.

Additionally, the criterion of luxury housing will be changed from ‘market value of 600 million won and actual area of 150 square meters’ to ‘market value of 450 million won and actual area of 135 square meters’. The housing in this category can’t receive exemption of conveyance tax regardless of the period of possession and reside.

National Tax Service will property tax rate step by step and apply heavy property tax on price fevering districts of Seoul in the early of the next year. The details will be announced soon from Ministy of Government Administration and Home Affairs.

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