[Jeon Jae-sik, Professor of Real Estate at Konkuk University] Through the recent August 3 tax law amendment, the government shifted the real estate taxation criteria from “number of homes and holding period” to “property value and actual residence.” While it has temporarily provided an exit route for multi-homeowners by reducing their capital gains tax burden through 2028, the property tax burden will continue to increase thereafter. Ultimately, this structure exerts pressure on homeowners to choose selling over holding.

The direction of the reform itself is justified. The aim is to reduce “speculative demand” by raising holding costs for non-resident and multi-homeowners, thereby redirecting housing toward actual buyers. However, for this logic to hold, actual buyers must be able to purchase the homes coming onto the market. The problem is that the current market is far from meeting that condition. With the market already contracted due to loan restrictions and the land transaction permit system, raising property holding taxes could lead to an increase in listings without a corresponding rise in transactions.

Transactions for high-priced homes—the primary target of this tax burden—were already sluggish due to the expiration of the grace period for the surtax on capital gains for multi-homeowners, and the tightening of tax policies will make market turnover even more difficult. Even for mid- to low-priced homes, it is difficult to stimulate transactions due to loan limits, the stress-test total debt service ratio (DSR), and financial institutions’ total household loan quotas. In essence, selling pressure is intensifying while the demand to absorb these listings remains thin.

The reduced liquidity in the sales market ultimately affects the rental market. Landlords who own a single non-residential property are more likely to choose to live in it themselves rather than sell, which will correspondingly reduce the supply of rental units. Multi-homeowners who continue to rent out their properties may pass on the increased property tax burden to tenants. Contrary to the government’s intentions, there is a heightened likelihood of negative consequences, such as a decrease in the supply of jeonse and monthly rent units and a rise in rental rates. Policies centered on owner-occupiers can lead to housing stability when implemented successfully, but if they fail, tenants may bear the burden, potentially causing rental instability.

For the tax reform plan to achieve its goals, curbing speculative demand must lead to stable sales prices, and the supply of non-residential and multi-home properties put up for sale must be absorbed by genuine demand. Additionally, the reduced rental supply must be replaced by other forms of housing, such as owner-occupancy and public housing. Only when tax, financial, and supply policies are coherently designed and implemented in tandem can the strengthening of incentives for owner-occupancy coexist with housing stability for tenants.