Real estate tax overhaul to have limited market impact: analysts

Property listings are posted at a real estate agency in Seoul’s Gangnam District, Monday. Yonhap

The government’s real estate tax overhaul is unlikely to have a significant impact on the housing market or construction stocks, as the measures are broadly in line with market expectations, according to analysts Tuesday.

The changes could, however, prompt some multiple-home owners and holders of high-priced properties to put homes up for sale to reduce their tax burden, while expanded tax incentives for regional investment and second homes could provide some support for property markets and construction stocks outside the capital region.

The assessments came a day after the Ministry of Finance and Economy announced its 2026 tax reform plans aimed at protecting single-home owners who actually live in their properties while raising the comprehensive real estate tax and capital gains tax burden on nonresident owners and high-priced homes. The government also plans to expand tax incentives for second homes in regional areas and corporate investment outside the capital region.

Kiwoom Securities analyst Shin Dae-hyun said the tax changes are unlikely to meaningfully affect the market, as housing supply appears to be a bigger driver of prices at a time when new-home completions and listings remain scarce.

“Tax hikes on property holdings and capital gains were largely expected, so they won’t have a major impact on share prices,” Shin said. “While some higher capital gains tax rates for multiple-home owners were eased, the impact is also likely to be limited as fewer people now own multiple homes than in the past.”

Still, expanded tax breaks for second homes and corporate investment outside the capital region, along with broader exemptions for relocation allowances, could provide some support for regional property markets.

“A continued recovery in home prices outside the capital could also help lift construction starts,” he said.

NH Investment & Securities expects the latest tax reforms to raise property tax burdens for single-home owners with properties valued at about 3.4 billion won ($2.4 million) or more.

For a home with a market value of 5 billion won, the comprehensive real estate tax is projected to rise by about 3.38 million won, from 11.55 million won to 14.93 million won.

Against this backdrop, the heavier tax burden could prompt multiple-home owners and owners of high-value properties to put their homes on the market to reduce their tax burden.

“A surge in tax-saving listings is expected during three key windows — this month following the tax reform announcement, late May before the holding tax assessment date and late next year before capital gains tax hikes take effect,” said Park Won-gap, a senior real estate specialist at KB Kookmin Bank. “Sellers are likely to include retirees without steady income, multiple-home owners and apartment rental business operators.”