Government accused of 'gaslighting' to shift blame for rising home prices as multi-home owner rules tighten

The argument is that the previous Moon Jae-in administration's capital gains tax penalties on multi-home owners helped in local elections, but this time the effect was minimal, and the party lost the Seoul mayoral race too, prompting a need to regroup. Analysts say the government is blaming multi-home owners, gap investors, rental business operators, and corporations for rising prices rather than the shortage of supply, shifting the blame for its own policy failures onto outside factors.

The government says it will 'work hard on supply,' but critics point out that supply cannot be delivered quickly in reality. Even the plan to start construction by 2030 would take considerable time before homes are occupied, so it would do little for short-term price stability. Once it became clear that Seoul home prices would keep rising through the end of the term, the government began to manipulate public opinion with lines like 'the houses aren't really rising' and 'it's because of multi-home owners, not the government's fault,' critics charge.

The government knows home prices will rise, yet it is attributing this to factors other than its own mistakes in an attempt to rally its base. Analysts say the government has realized that short-term measures introduced after May 9 will not work in the long run, and has shifted toward increasing units on the market. Experts argue that not only new supply but also existing and circulating inventory counts as supply, and say the government is again pressuring groups it previously regulated, such as multi-home owners, corporations, and rental operators, to push properties onto the market.

In particular, corporations face tighter rules and rental operators are under pressure, and now there are signs the government is moving to target non-resident single-home owners. Because that group is large, mishandling it could hurt the administration politically, so the government is reportedly 'building up' a process to sort regulated targets by residency status. Policies are being coordinated around the first half of 2028, and one forecast is that the government may play a card such as temporarily easing capital gains taxes on multi-home owners.

The design seems to anticipate that supply will hit the market and freeze at the same time. By adjusting tax rates on a sliding scale, the policy aims to make homeowners wonder, 'Should I sell in 2026 too?' and so keep properties coming to market continuously, increasing circulating inventory while new supply is short.

Some observers expressed skepticism that supply will rise as intended. One critical comment was: 'But is that really effective? No.'

The criterion would be whether someone lives in the home: those who live there would be considered good, and those who don't would likely be considered bad. Critics also point out that even owner-occupied homes in the ultra-high price range could be classified as bad.

The view is that the ultimate target of this policy is likely high-priced apartment owners in Gangnam. Given the high level of support for a particular party in the Gangnam area, the calculation is that regulating them would carry little political cost. Meanwhile, critics say the government wants to give others the impression of 'a refreshing cider'-like relief, to rally its base and convince those in the gray zone that it is doing well. Some interpret the aim as selectively regulating certain single-home owners in order to extract cash from them.

Rather than imposing heavier taxes to fix this, some argue that the income tax exemption bracket should be abolished. Currently, people below a certain income level pay no income tax at all, and this concentrates the tax burden on a small group.

The view is that people under their 20s should either be exempt or, at minimum, those earning around 6 million won a year should pay something, broadening the tax base to make the system fair. The argument is that everyone with income should share the burden in small amounts, which reflects a belief that the tax system needs fundamental reform.

The imbalance in tax burden has been debated for a long time, and the income tax exemption bracket is a key issue for both the number of taxpayers and revenue. Some counter that narrowing or abolishing the bracket could increase the tax burden on low-income earners, but a growing number of voices say it should be reviewed over the long term to achieve fair sharing of taxes and fiscal soundness.

It caps loan-to-value ratios at 40% and refuses loans to multi-home owners altogether, yet in the stock market it encourages investment using margin accounts and leverage, a contradictory stance.

This is seen as a double standard: treating the property market as a breeding ground for speculation and blocking healthy asset building, while overlooking the risks of the stock market. Concerns have been raised that this attitude hampers the normal functioning of the property market and may instead stimulate speculative sentiment.

This is read as a shift in policy, questioning whether it is justified to keep granting benefits to people who repeatedly profit by trading up homes.

The move appears to reflect the government's intent to discourage investment through 'trading up' and to encourage ownership for actual residence. Narrowing the tax exemption could significantly raise the tax burden on this type of owner and is expected to have a notable impact on the market.

It was noted in particular that because South Korean presidential terms last five years, the finite nature of an administration becomes an important variable in investment strategy.

Pointing out that some people can return to their own homes when their term ends while others cannot, the argument is that this is an important consideration for those seeking investment opportunities within regulation. An awareness is spreading among investors that regulatory policy is not permanent, and analysts say they may plan to endure current rules in hopes of change under the next administration, or sell at a particular time.

This makes it harder to get tax benefits simply by holding a home for a long time, and is read as an attempt to encourage actual residence. In other words, the policy focus is shifting from 'holding' to 'living in.'

In detail, until 2024, a combined 4 years of residence and 4% holding could earn up to an 80% long-term holding special deduction. By 2028, the residence weighting is set to fall to 6% and the holding weighting to 2%. In 2029, the residence weighting would expand to 8%, and holding-based deductions would effectively disappear. The change is expected to push owners to lengthen their residence or sell non-resident homes.

The revision is expected to hit multi-home owners and those holding homes for investment especially hard. Owner-occupiers may keep their benefits, but investors who were seeking capital gains from non-resident homes will inevitably face a heavier tax burden.

The direction reflects a clear intent to curb speculative demand in housing and reorient the market toward actual users. However, analysts say it could affect the flow of homes onto the market and, ultimately, change liquidity in the housing market.

The deduction for older owners will remain, but holding-based deductions will gradually disappear, leaving only residence-based deductions. This means older households, especially those on reduced income after retirement who have owned homes for a long time, may struggle to bear the tax burden.

The change starts next year, and by 2028 only the residence deduction will remain, putting heavy pressure on older residents who want to keep their homes. The commentator Mango Ssaem warned that older owners could be forced to sell quickly, saying, 'Until how many years do we have to sell? Sell this year or something.'

Critics say the policy would undermine housing stability for older people and force them to liquidate their assets. Because older residents often see their homes as both an asset and a place to live, the prospect of having to leave a cherished home over tax pressure is expected to spark social controversy.

The criticism reflects a belief that the government, which should protect older residents' housing rights and guarantee stable retirement, is effectively trying to push them out of the market. For older people for whom a single home is their entire fortune, the policy is described as harsh.

While the government says it is revising the tax system to improve tax equity and curb property speculation, critics argue that the process could shake the livelihoods of specific groups, particularly older people. The policy risks being seen as lacking consideration for socially vulnerable people.

The point is that Korea's tax system is not following the rational tax structures of other advanced countries but borrowing the parts that impose the heaviest burden to achieve particular goals.

On property holding tax in particular, the argument goes that many people cite overseas cases to claim Korea's holding tax is low, yet in practice Korea takes the harshest or heaviest elements from various countries' tax systems, causing unfairness and social resistance. Such selective citation can leave the impression that the government is exploiting overseas examples to justify its policy direction.

The government argues that owners of expensive homes pay too little tax and calls for higher holding taxes in the name of fairness. But analysis shows the increase in holding tax has far outpaced the rise in home prices. Assuming the median national-size apartment in Seoul is worth 1.5 billion won, its price rose 3.3 times while its holding tax rose 15.6 times, according to the analysis.

That means the holding tax increase is roughly five times the rate of home price growth. Rebutting the government, critics say owners of high-priced homes are already paying taxes far out of proportion to their price gains, and the claim that they 'pay little and are unfair' does not match the facts. Such figures cast doubt on the fairness argument the government uses to justify tax hikes.

As a result, the argument gaining traction is that rather than simply declaring that owners of expensive homes pay too little, the real burden should be assessed by comparing actual price growth with tax increases. The gap between the statistics the government cites and what citizens experience is at the heart of this controversy.

In countries such as the United States, more than 95% of property-related taxation consists of holding taxes. Korea, by contrast, relies heavily on transaction taxes with a relatively small holding tax share. The government presents only part of the picture, arguing holding taxes are low to press for higher rates, yet looking at the share of property-related taxes in total revenue, Korea is not small, sitting above the OECD average. Critics argue against the government's approach of presenting only part of the statistics to secure legitimacy for its policy.

The analysis is that the holding tax increase on non-resident single-home owners and the combined real estate tax burden will be passed directly to homeowners, who will then be forced to raise rents to offset the taxes.

In particular, a shrinking supply of circulating homes is expected to worsen the rental market shortage and accelerate rent increases. If homeowners choose to raise rents rather than list homes to avoid taxes, the burden ends up on tenants, raising concerns that it will harm housing stability for ordinary households.

Even as listings decline, demand for school districts remains strong, and high-end prices are expected to keep rising, with one example being a home rising from 4 billion won to 5 billion won.

The problem is that because of lending rules, the higher the collateral value of a home, the less can be borrowed against it, a strange effect that makes moving to preferred areas even harder. This could keep people in lower-tier areas where they are and reduce capital outflow from those areas, pushing up prices there too in a 'gap-filling' effect. In other words, prices in both upper-tier and lower-tier areas could rise together.

This could also push up jeonse and monthly rents, making it highly likely that the pain of higher holding taxes will fall on tenants. If owners pass their tax burden on as higher rents, the housing burden on real-user tenants will grow, raising concerns about widespread housing instability.

In conclusion, critics argue that the government's real estate policy could actually deepen the polarization of the housing market and cause housing instability for ordinary households. Falling supply and lending restrictions together are distorting the market further, critics say.

In particular, young buyers purchasing homes priced at 1.5 billion won or 900 million won or less mostly borrow to buy. Gap investing has become harder, making loan-financed purchases for actual residence essential.

Because regulations such as land transaction permit zones mean one cannot buy a home without living in it, actual residents are pushing prices up. But since the government cannot directly regulate these residents, it is trying to indirectly restrict them by setting annual loan limits. Under the effect of these lending rules, some young people in their 20s and 30s are buying apartments in outer Seoul and driving price rises in those areas, according to the analysis.

This phenomenon suggests that government housing policy is unintentionally pushing up prices in specific parts of Seoul. A paradox is emerging in which policy meant to help actual buyers is in fact fueling price growth.

As a result, the Seoul housing market is showing hard-to-predict movements as the complexity of regulation and changes in demand intersect. Critics also argue that government policy is not accurately reflecting how the market actually moves.

He stressed, however, that the more important question is whether prices will rise further. From the perspective of an apartment super-cycle, he assessed that only 30 to 40% of the total expected rise has happened so far.

This suggests the current price rise is not a mere temporary phenomenon but is likely in the early stage of a long-term upcycle. In other words, the future market outlook matters greatly for both investors and actual buyers, and it can be read as a signal that a larger price increase may be coming.

Interest rates remain at a manageable level and no sudden shocks such as a financial crisis are expected, so the argument is that the current housing market should be approached through the logic of supply and demand.

In particular, Seoul's housing supply has fallen below 10,000 units for the first time since 1982, and this supply shortage is expected to persist for at least three years. That signals a deepening structural problem in which supply cannot keep up with demand.

As a result, with supply extremely constrained and demand steadily present, Seoul home prices are structurally bound to keep rising, the conclusion goes. The warning is that upward price pressure will continue unless the fundamental supply-demand imbalance is resolved, despite the government's various regulations.

This instability is making the Seoul housing market even less predictable and adding to uncertainty for both actual buyers and investors. Calls are growing for urgent fundamental measures to expand supply if the Seoul housing market is to stabilize over the long term.

In Seoul too, investment is shifting from a broad 'area' to specific 'lines' such as the Han River belt. This suggests that, within Seoul, areas with redevelopment or reconstruction potential may be more promising for investment than cheaper apartments on the outskirts. The expectation is that as regulation tightens, investment choices narrow and the concentration on certain high-quality assets intensifies.

It is forecast that for at least the next five years, there will be no option other than the 'one good home' strategy. The advice is to target apartments of roughly 2.5 billion won or less at current prices, somewhat less 'good' than before. The reason is that the regulatory burden on high-priced homes is heavy and market uncertainty is expected to persist.

He stressed that policy will change once the administration changes, so new strategies must be built to match those changes. The meaning is that while the current policy course remains in place, one should approach cautiously, and respond flexibly to market shifts after a change of government.

This advice suggests that in today's complex, heavily regulated market, a long-term perspective is needed. The analysis is that strategies aiming for stable asset preservation rather than short-term capital gains will be effective.

In conclusion, the message is that the current market favors long-term investment in a 'one good home,' and specifically in homes below a certain price range, while flexible strategies should be prepared for future policy changes.