Finance Minister: Anti-Speculation Rules Need Review

Strategy and Finance Minister Kang Man-soo said yesterday that the government needs to review all regulations intended to prevent real estate speculation.

His comment was stronger than that made Thursday, when he said he does not oppose the proposal by the Land, Transport and Maritime Affairs Ministry to delist three affluent districts of southern Seoul -- Gangnam, Seocho and Songpa – as “speculation” or ‘speculation-watch” zones.

Thus the government is expected to greatly ease regulations on the real estate market.

At a contingency committee at the Gwacheon Government Complex, Kang said, “The Strategy and Finance Ministry will consider easing anti-speculation regulations. We’ve already asked the Land Ministry to review all related regulations.”

“We have to be worried about deflation, not real estate speculation. More attention is needed on asset deflation, which has cut jobs and made things more difficult for the self-employed.”

The Finance Ministry had long expressed opposition to the Land Ministry’s proposal to remove the price cap on newly built apartments, and exempt capital gains taxes for those buying homes that had long been on the market and then selling them five years after purchase, citing the danger of real estate speculation.

Now since Kang said the ministry should review all real estate measures to revive the economy, however, the Land Ministry’s proposals are highly likely to be accepted.

Many anti-speculation regulations enacted by the former Roh Moo-hyun administration remain.

The comprehensive property tax introduced in August 2005 is expected to see a major cut in the wake of the Constitutional Court’s ruling that the tax is unconstitutional. The government, however, has yet to make changes to the tax imposed on those with several homes.

Though the administration and the National Assembly’s Strategy and Finance Committee have tried to cut the tax on those with several homes, they withdrew the proposal due to strong public opposition.

Reconstructed apartments are still under heavy regulation. As the former Roh administration introduced a system in 2006 under which those with reconstructed apartments should return their extra profit to the government when selling their homes, the prices of certain reconstructed apartments in southern Seoul have been almost halved.

The system, however, remains in effect.

The capital gains tax is also imposed on the right of occupancy held by members of reconstructed apartment unions.

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