Speculated Areas to be Lifted Selectively

The government and the Uri Party have decided to take flexible management over the anti-speculation measures and are considering lifting the “speculated area” nametag in the local cities with stabilized real estate prices coming the second half of this year.

It has also been decided to provide a joint building site of 13 million pyong (7 million for the Seoul metropolitan area), some 16 times larger than Yeouido, within this year.

The party-government, with Uri Party leader Chun Jung-bae, chief policy maker Hong Jae-hyung, Deputy Prime Minister and Finance-Economy Minister Lee Hun-jai and Construction-Transportation Minister Kang Dong-suk attending, held a party-government consultative conference at the National Assembly on July 2, and agreed to the above decisions.

Hong said through the briefing that day, “Currently, 57 areas are tied down as speculated areas (in the housing sector), and we will consider selectively lifting areas with stabilized real estate prices.”

Relating to this matter, Lee Jong-kyu, Director General for Tax Affairs at the Finance-Economy Ministry, explained, “The conditions to lift the areas designated as speculated areas must be decided on in detail, and then the areas with stabilized real estate prices and without factors for speculation will be considered whether or not to be lifted.”

In order to expand the supply for new residential sites, the party-government will alleviate the minimum area standard (currently over 300,000 square meters) for developing apartments within areas in management (areas which were quasi-agricultural land and quasi-urban communities). Apartments can be built in areas with schools already existing or with school sites if they are over 100,000 square meters.

Also, a total 4.5 trillion won will be additionally released to stabilize public livelihood and support small and middle enterprises.

For this, a supplementary budget bill for 1.8283 trillion won and an advised bill for a 633 billion won fund employment plan, altogether a measure to expand financial expenditure for some 2.4 trillion won, which must be moved by the National Assembly, was passed at the cabinet council on July 2.

An increasing rate in home prices for a specified area is appointed when it is exceptionally higher than the consumer price and the average increasing ratio for home prices, which may bring speculation. The capital gains tax is charged by the actual transaction value instead of the tax standard value, which increases the tax burden. However, there is a difference with excessive speculation zones that is applied to restrictions to supplying homes such as prohibiting the resale of home ownerships.

Jong sik Kong Hoon Lee kong@donga.com dreamland@donga.com