Sales for Small Apartments in Pangyo May Be Delayed

To draw up comprehensive real estate policies by the end of August, the ruling Uri party and the government are going to form a joint planning committee and examine the effectiveness of the real estate policies implemented under the current administration.

The Uri Party, the Ministry of Finance and Economy, and the Ministry of Construction and Transportation announced on June 19 that the joint team will look into the new town development plan in Pangyo, which has been blamed as the reason for the recent real estate prices increase, the housing supply plan focused on middle- and large-sized apartments, property tax reform to suppress real estate speculation, and plans to cut off the capital influx into the real estate market.

It is possible that apartment sales in Pangyo New Town, including not only sales of middle- and large-sized ones, but also small-sized ones (smaller than 25.7 pyeong or 85 square meters) will be delayed until next year or later when the examination ends.

An official of the Construction Ministry said on the same day, “We should re-examine the development procedure of Pangyo,” and added, “The sales of small apartments [as well as large ones] can be rescheduled.”

The ruling party and the government are also planning to revise the comprehensive real estate tax system to apply it to a wider scale as the current system is not sufficient in repressing real estate speculation.

Currently, the comprehensive real estate tax is imposed on houses worth over 900 million won, bare land worth over 600 million won, and land for business purposes worth over four billion won based on tax standard values issued by the National Tax Service.

One finance ministry official said, “The committee will have discussions on issues related to the real estate tax such as the comprehensive real estate tax, property tax, capital gains tax, and ways to improve them.

The government and the ruling party will also devise measures to deter the inflow of money into the real estate market caused by the low interest rate.

Jae-Seong Hwang Chi-Young Shin jsonhng@donga.com higgledy@donga.com