Signs of Easing Actual Residency Requirements Detected Ahead of August 20 Measures; Seoul City and Government Differ on Yongsan Park Development

Ahead of the August 20 real estate policy announcement, signs of change are being detected in the mandatory actual residency policy. Kim Hak-ju, CEO of the Urban Development Research Institute, recently stated that he heard that the policy would change to the extent that actual residency benefits themselves would disappear. This suggests that the existing strong actual residency requirement might be somewhat relaxed.

CEO Kim Hak-ju analyzed that the government is collecting various public grievances related to the August 3 tax reform plan, and there is a high possibility that these grievances will be reflected in the policy. The prevailing view is that it will be difficult to proceed as initially planned by the government, and attention is focused on whether market voices can lead to policy changes.

It is expected that the August 3 tax reform plan will not proceed as initially drafted by the government. CEO Kim Hak-ju anticipated that the government would revise its policy direction by reflecting many public grievances. This indicates that market participants' opinions are significantly influencing the policy-making process.

In particular, the reflection of these grievances is expected to be prominent in matters related to mandatory actual residency, and attention is focused on what changes will be included in the final August 20 measures. How much the government accepts market demands will be a crucial variable determining the effectiveness of the policy.

Controversy has arisen over the effectiveness of the mandatory actual residency policy. CEO Kim Hak-ju pointed out that government officials have not provided clear answers regarding the necessity of actual residency. It was also argued that the president's perception that 'non-residency is speculation' is the sole basis for the policy.

Kim added that while the current government maintains a consistent view that owning a house without residing in it is speculation, this logic alone is insufficient to explain market conditions and diverse housing demands. Calls are growing for a deeper discussion on the impact of mandatory actual residency on the market and its purpose.

It has been argued that during periods of soaring Jeonse and monthly rent prices, tax benefits should instead be given to non-residents. CEO Kim Hak-ju emphasized that it is inappropriate to regulate those who actually reside during a surge in Jeonse and monthly rent prices; instead, benefits should be provided to non-residents to increase market supply.

Kim warned that measures for non-residents should aim to stabilize the Jeonse and monthly rent market, while actual residency measures could actually have a negative impact on the market. This can be interpreted as an opinion to reconsider the ripple effect of the mandatory actual residency policy on the Jeonse and monthly rent market.

The government's real estate policy trend appears to be maintaining multi-home regulations while strengthening regulations on single-home owners. CEO Kim Hak-ju explained that the current government is maintaining its stance on regulating multiple homes, strengthening transaction taxes, and disallowing unearned real estate income. This policy direction is analyzed to further deepen the phenomenon of 'one smart home' in the market.

The 'one smart home' phenomenon refers to the concentration of assets in homes with excellent location and value. CEO Kim Hak-ju asserted that this 'one smart home' phenomenon cannot disappear under the current government's policy. With multi-home regulations maintained and regulations on single homes also strengthened, people will inevitably flock to a few more valuable homes.

Consequently, there is a possibility that price polarization will intensify in the market due to the combination of reduced housing supply from multi-home regulations and strengthened regulations on single-home owners. This could lead to unintended side effects for policy makers and raises concerns that it could undermine the stability of the housing market in the long term.

A warning has been issued that the mandatory actual residency policy could lead to serious side effects in the Jeonse and monthly rent market. CEO Kim Hak-ju expressed concern that demand for housing through Jeonse would become difficult to enter due to the actual residency requirement. It is predicted that the supply of Jeonse and monthly rent will sharply decrease as many homes are converted for actual residency.

This supply reduction will act as upward pressure on Jeonse and monthly rent prices, severely impacting the housing stability of ordinary citizens. CEO Kim Hak-ju emphasized that the mandatory actual residency will lead to enormous side effects in the Jeonse and monthly rent market. This conveys a message that the ripple effect of mandatory actual residency on the entire housing market should be carefully considered.

The 'mass exchange' phenomenon, aiming for tax benefits, is rampant in Gangnam's ultra-high-end housing market. Kwon Ki-heon, Director of the Urban Development Research Institute, explained that at this point, it is more advantageous to exchange similar-grade apartments or houses with each other rather than selling them. The judgment is that by doing so, transactions can be reset and benefits can be received in advance of the tax benefit increase scheduled to be strengthened from 2029.

These exchange transactions are interpreted as a strategy for high-priced home owners to maintain assets while minimizing tax burdens. Criticism is emerging that the current tax system is inducing such unconventional transactions, and the necessity of re-evaluating the impact of government tax policies on the market is being raised.

A forecast suggests that the supply of apartments from redevelopment and reconstruction projects will significantly increase in the next 5-6 years. Director Kwon Ki-heon predicted that at that time, the current actual residency requirement will likely disappear. The analysis is that the need for actual residency will decrease once supply becomes sufficient.

This implies that, from a long-term perspective, market stabilization and deregulation can naturally follow if housing supply is achieved. Kwon emphasized that an increase in housing supply will be a critical variable for easing actual residency requirements. This suggests that current regulations may be a temporary phenomenon.

Criticism has been raised that the government's real estate policies, applied uniformly without distinguishing between apartments and non-apartments, could exacerbate market confusion. Director Kwon Ki-heon noted that even during a recent meeting between Seoul Mayor Oh Se-hoon and the President, the President's remarks showed a failure to distinguish between apartments and non-apartments.

This suggests that the government may not be sufficiently aware of the diverse types and characteristics of the housing market. Kwon warned that policies that overlook the importance of apartments and non-apartments can create a disconnect with actual market conditions, reducing policy effectiveness. Calls are growing for customized policies that consider the specific characteristics of each housing type.

A clear difference in opinion between the Seoul Metropolitan Government and the central government regarding the development of Yongsan Park has sparked controversy. Minister of Land, Infrastructure and Transport Park Sang-woo stated that the children's garden is a narrow concept and that the entire Yongsan Park is being considered. This remark, interpreted as hinting at the possibility of developing the entire Yongsan Park site, caused a significant stir.

In response, Seoul Mayor Oh Se-hoon strongly opposed, declaring he would not agree to even 1cm of damage to Yongsan Park. Mayor Oh emphasized that Yongsan Park is a space decided through the will of citizens and long-term consensus, making it clear that he would oppose any development attempts that undermine the park's original purpose.

This difference in stance between the government and Seoul City signals that a sharp confrontation over the future direction of Yongsan Park will continue. Civil society organizations are also raising their voices demanding park preservation, thus the debate surrounding Yongsan Park development is expected to intensify.

As Yongsan Park is a space of national symbolic significance, calls are growing for sufficient communication and consensus among the government, local authorities, and citizens in the process of deciding its development direction. Attention is focused on what solution will emerge amidst the conflicting values of development and preservation.

A forecast suggests that regulations on the transfer of membership status, one of the important real estate regulations, are likely to be eased within a year. CEO Kim Hak-ju stated that, in his judgment, the transfer of membership status will become possible within a year. This statement could significantly impact investors in redevelopment and reconstruction projects, where the transfer of membership status is currently restricted.

Easing regulations on the transfer of membership status can increase the liquidity of redevelopment and reconstruction projects and boost investment attractiveness. However, concerns may also arise that it could encourage the influx of speculative forces. Growing interest surrounds the government's reasoning for considering such deregulation and the timing of its implementation.

CEO Kim Hak-ju's remarks suggest that internal discussions, currently unknown to the market, are underway, and attention is focused on future government policy announcements. If deregulation does indeed occur, it is expected to bring significant changes to the redevelopment and reconstruction market.

Signs of easing loan-to-value (LTV) regulations for rental business operators are emerging. CEO Kim Hak-ju reported that while multi-home rental business operators currently receive no home equity loans, registered rental business operators under civil law will be allowed an LTV of 60%, regardless of whether it's a regulated area.

This can be interpreted as a government effort to invigorate the supply of rental housing. By lowering the loan barrier for rental business operators to encourage home purchases, the aim is to increase the supply in the Jeonse and monthly rent market. However, concerns may also arise that easing loan regulations for multi-home owners could fuel market overheating.

A strong warning has been issued regarding lender-centric loan deregulation policies. CEO Kim Hak-ju emphasized that providing benefits to suppliers is a policy that should never be implemented. He expressed concern that giving benefits to suppliers could lead to the skyrocketing of land prices.

Kim explained that if land prices, which are fundamental to redevelopment, increase, the prices of redeveloped apartments will also inevitably rise. This points out that while easing loan regulations may appear to increase supply in the short term, it could act as a cause of rising housing prices in the long term. Criticism is also being raised that supplier-centric policies may prioritize the interests of specific groups rather than overall market stability.

Such arguments suggest that the government must carefully examine the fundamental mechanisms and side effects of the market when pursuing supply expansion policies. Indiscriminate benefits to suppliers can ultimately be passed on to final consumers as a burden, which could lead to outcomes different from the policy's original intent.

It has been argued that the activation of non-apartments should be the foundation of all real estate policies. CEO Kim Hak-ju emphasized that the only way to curb soaring Jeonse prices is through non-apartment activation. He added that the government has begun to recognize the necessity of this non-apartment activation.

Non-apartment activation refers to a policy direction aimed at stabilizing prices and absorbing demand in the Jeonse and monthly rent market by increasing the supply of housing types other than apartments. Kim argued that it is urgent to move away from policies that have focused solely on apartments and to recognize the importance of the non-apartment market and implement related policies. It remains to be seen how much the government will accept this argument.

A forecast suggests that if the non-apartment activation policy successfully stabilizes the Jeonse and monthly rent market, it will be maintained for quite a long time. CEO Kim Hak-ju explained that if the Jeonse and monthly rent market stabilizes due to non-apartment activation, the government will not easily tamper with this policy. This can be interpreted as a positive sign for policy sustainability.

Non-apartment activation is considered an important measure that can solve the chronic supply shortage in the Jeonse and monthly rent market and contribute to the housing stability of ordinary citizens. If this policy actually proves effective in stabilizing Jeonse and monthly rent prices, it will be welcomed by both the government and market participants. Kim added that once this policy is established, it will not change easily, so there is no need to worry.

Therefore, it is crucial for the government to show commitment to non-apartment activation and pursue consistent policies. The focus should be on long-term market stabilization rather than short-term results, thereby ensuring policy credibility and enhancing predictability for market participants.

The success of the non-apartment activation policy will be a critical variable determining the future direction of the Jeonse and monthly rent market. Attention is focused on how this policy will actually impact the Jeonse and monthly rent market and how long its effects will last.