What's next for Korea's housing market after tax break for multi-home owners ends?

A visitor looks out over apartment complexes from Mount Nam in Seoul, Tuesday. Yonhap

By Lee Hyo-jin

• Published May 7, 2026 12:00 PM KST

With number of homes for sale expected to shrink, prices in capital region may face renewed upward pressure, experts say

With a temporary tax break for multi-home owners set to expire, attention is now turning to whether the Lee Jae Myung administration's real estate policies will be able to stabilize Korea's overheated housing market going forward, according to market analysts Wednesday.

The issue sits at the heart of the Lee administration's push to rein in soaring home prices as part of what it calls the "normalization" of the housing market. One of the key measures will take effect starting Saturday, when a temporary tax benefit expires, restoring steep capital gains taxes on owners of multiple properties.

The move could impose an effective tax rate of up to 82.5 percent on home sales, depending on the number of properties owned — a sharp increase from the current 6 to 45 percent range.

In principle, sellers must complete contracts and payments ahead of the Saturday deadline to avoid the tax hike, though the government has introduced limited grace periods for transactions already in process.

While government officials insist that ending the capital gains tax exemption would encourage multi-home owners to sell and increase supply, many in the market are bracing for a different outcome.

"Those who intended to sell have already done so before the deadline," said Kwon Dae-jung, a real estate professor at Hansung University. "Logically, few would be willing to sell when they face tax rates of more than 80 percent. Some may even withdraw listings, while many others are likely to hold or transfer them to family members instead."

As a result, the number of homes up for sale is likely to shrink further, he said, potentially adding upward pressure on home prices in the greater Seoul area.

Kim Je-kyung, chief consultant at real estate agency Tumi, echoed the view.

"Transaction volume will likely slow and the reduced supply may add price pressure," he said. "After multiple administrations' failed housing policies, many multi-home owners have come to believe that no government policy can beat the market, leading them to adopt a wait-and-see approach," he added. "At this point, tax policies targeting multi-home owners alone are no longer enough to resolve the overheating in the housing market."

Data suggests that the window for selling may have already passed.

According to real estate data platform Asil, the number of apartment listings in Seoul stood at 70,133 as of Wednesday, the lowest level in 71 days.

Listings had briefly surged earlier this year as the government signaled an end to the tax break. After the president first ruled out an extension on Jan. 23, the number of listings climbed steadily, surpassing 80,000 units in March for the first time in about nine months.

But the trend has since reversed, with supply shrinking again as the Saturday deadline approaches.

Beyond the shortage of listings, analysts say a bigger concern is the rental market.

Korea's housing system is heavily reliant on the "jeonse" model, under which tenants provide a large lump-sum deposit instead of paying monthly rent. That structure makes supply particularly sensitive to changes in ownership patterns.

"The jeonse market is already strained due to a lack of supply in Seoul and surrounding regions," Kim said.

He warned that with new supply limited and rental listings already tightening, pressure on the market could intensify in the coming months, particularly during the peak moving season in the fall.

However, the government expects the impact of the tax reinstatement to remain contained, shrugging off concerns over sharp price increases.

Kim Yong-beom, presidential chief of staff for policy, said the resumption of higher capital gains taxes is unlikely to trigger a sharp surge in prices, arguing that current market conditions differ from those in 2021, when prices spiked after similar measures were first introduced.

"I expect (price increases) to be more moderate," Kim said during a briefing Monday, adding that the market remains wary of the government’s policy stance on real estate-related taxes.

"Supply has yet to catch up with recovering demand, and a temporary decline in listings may occur following the policy change," he added, noting that the government would proceed with plans to supply 60,000 homes to prevent so-called “panic buying” and stabilize the market.

Additional tax curbs expected

Still, the possibility of additional tax revisions in the coming months remains a major uncertainty for the housing market.

The president on Wednesday reaffirmed his commitment to stabilizing housing prices, hinting at further curbs.

"Invincibility of real estate? There will no longer be such a myth," Lee wrote on X (formerly Twitter). "The normalization of the real estate market is an inevitable trend of the times, as well as a key policy task that must be accomplished."

Further tax measures are widely expected after the June 3 local elections, including possible increases in property holding taxes and changes to long-term ownership tax deductions.

Currently, such tax breaks allow owners to reduce capital gains taxes based on how long they have held a property, but the government is considering scaling them back or linking them more closely to actual residency.

But some analysts caution against relying too heavily on tax measures.

"If property holding taxes rise, the sales market may partially stabilize. But the burden could be ultimately passed on to tenants through higher rental costs, especially in Seoul, where supply remains tight," said Park Won-gap, a senior real estate analyst at KB Kookmin Bank.