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The government said Sunday that it plans to unveil a set of measures to revitalize the property market, Monday. Seen above is the apartment complex in Songpa-gu, southern Seoul. / Yonhap |
Sales prices of houses decline for 12 straight months
By Cho Mu-hyun
The government will unveil a set of measures today to revitalize the real estate market and inject new vigor into the sluggish economy.
According to government officials, Sunday, the Park Geun-hye administration will announce its first property market stimulus measures with a focus on easing the current tax burden and revival of the real estate market.
The move has become necessary given that the domestic real estate market is still in the doldrums despite a series of measures introduced by the former Lee Myung-bak administration.
According to Korea Appraisal Board, sales prices of houses have declined for 12 straight months from last March. Lease prices, on the other hand, increased for seven straight months.
As of the end of February, there were 73,386 unsold new homes in the country, though the number dropped slightly from 75,180 in the previous month, according to the Ministry of Land, Infrastructure and Transport.
Officials say that the new measures will include easing regulations regarding acquisition and capital gains taxes and restricting home supply. The government is expected to exempt first-time homeowners from acquisition tax and also remove a system that imposes additional taxes on owners of multiple homes.
The government is also expected to lower interest rates for government mortgage loans from 3.8 percent to 3 percent for new home buyers.
However, rules related to household debts, such as loan-to-value or debt-to-income ratios, will be excluded, believing that such measures will exacerbate the problem of household debts.
Market watchers have been anticipating the measure since Park took office in February and expects it to be comprehensive as it was one of her pledges to normalize the property market in every possible way.
"We have many urgent tasks ahead of us, but we must first normalize the real estate market," Minister Suh Seung-hwan said earlier. "The prolonged downturn in the real estate market is not only leading to shrinking of the real economy but is also threatening the very livelihood of our people."
The construction minister earlier said the government will not take any measures that will artificially raise the prices of homes, maintaining the ongoing slowdown in the property market was mainly due to fears of further price drops.
"I believe new transactions will be made in the market as long as there is an expectation that house prices will not drop any further," he said.
Construction firms have long been anticipating these government measures as they see their profits here decline despite the high discounts they offer.
However, they are likely to be disappointed by the exclusion of the relaxation of financial regulations which they believe will increase immediate home purchases. Market analyst predicted that it will mostly come at a later date.
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