Seoul mayor calls for three-fold increase in real estate taxes

Seoul Mayor Park Won-soon said Wednesday that real estate taxes should be raised three-fold, as housing prices soar despite governmental efforts to discourage real estate speculation.

“The ratio of comprehensive real estate taxes in Korea stands at only 0.16 percent, which is a third of the average of the Organization for Economic Cooperation and Development,” he said on an MBC radio program. “It is appropriate that the ratio increases three-fold.”

On Monday, the government unveiled the toughest measures ever to rein in soaring housing prices -- including stricter lending rules for home purchases and a hike in taxes for owners of high-priced homes and multiple houses.

On the government’s actions, Park called for “fundamental” measures and said “shocks” are necessary, adding that the series of measures laid out by the government might not be effective because the market has developed a tolerance to such changes.

“Supply of houses in Seoul has continued to expand, but homeownership rate has fallen,” he said, adding that the issue should not be left solely to the market.

The government measures announced Monday include a rise of the comprehensive real estate tax rate, imposed on those who own a home worth more than 900 million won ($770,000) in posted price, by 0.1 percentage point to a maximum 0.3 percentage point. Owners of multiple homes in overheated areas will face an increase in a tax rate by up to 0.8 percentage point.

Later in the day, Park stressed the importance for the young of leveling the playing field in the real estate market. 

“A society where young people can continue to enjoy wealth with real estate they inherited from parents is wrong,” he said during a debate session held Monday at the National Assembly on inequality in real estate for the young.

“We should make the society healthy where ‘sweat’ is respected rather than ‘land,’” he added, noting a situation where workers in cities saw an 11 percent increase in monthly salary while the average housing price had soared by 44 percent over the past seven years.

The Seoul Metropolitan Government assigned 500 billion won for youth policies in next year’s budget. That includes financial support for housing for newlyweds and expansion of monthly subsidies for young single-person households.

By Ock Hyun-ju (laeticia.ock@heraldcorp.com)