The Ministry of Land, Infrastructure and Land announced Wednesday that it will review its “roadmap to reflect reality to the official real estate price.” This translates to a significant change to the original plan of raising the rate of so-called reality rate of official prices against market prices of apartment complexes, single family houses, and lands to 90% by 2030.
The Yoon Suk-yeol administration put a brake to the roadmap because the tax pressure to house owners have reached an unbearable level from the surge in official price of housing. The roadmap had been promoted by the former administration under the cause that people living in expensive housing should bear a matching pressure. However, with the complaints from people being bombarded with tax bombs, even the Democratic Party of Korea, which initiated the roadmap, raised the issue to adjust the pace. As a matter of fact, 870,000 houses, 21 times larger than the figure in 2017, in Seoul experienced a tax hike of up to almost 30%, which is the maximum property tax raise limit resulting from the excessive official price increase.
The official property price is not only used for real estate taxation but used also for enforcing 67 administrative policies including medical insurance charges or basic pension. In other words, tweaking the official property price may result in rejection of eligibility from basic living security or from dependent position in medical insurance for those who should be receiving such protections.
Most of all, the present official real estate price has lost credibility as it has many errors in the process of research. Errors include setting the price of a single-family house official price based on deserted house or unlicensed building or a bigger space apartment household’s official price set lower than the price of a smaller space apartment in the same compound. As the standards for official price setting is unclear, disputes over the “elastic official price” have been continuing. If the measure of research in setting the real estate official price was wrong, it would be difficult to win back the trust no matter how much the original plan is adjusted.