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(2nd LD) S. Korea to add 132,000 housing units in greater Seoul area to stabilize home prices

All News 11:26 August 04, 2020

(ATTN: ADDS remarks, details from para 8)
By Kim Deok-hyun

SEOUL, Aug. 4 (Yonhap) -- South Korea plans to supply 132,000 housing units in Seoul and its neighboring area, in the latest effort to stabilize home prices and ease fears of shortages, Finance Minister Hong Nam-ki said Tuesday.

The government will ease some construction rules, allowing redevelopment projects of aging apartment buildings to increase their floor area ratio to up to 500 percent to build more homes, Hong said.

Such redevelopment projects will also be allowed to build 50-story apartment buildings, Hong said.

Construction of the new homes will begin this year and be completed by 2028, Hong told reporters.

In particular, public housing units will be allotted for first-time home buyers and young people, Hong said.

This photo, taken on July 15, 2020, shows high-rise apartments in the southeastern Seoul ward of Songpa as seen from an observatory at Lotte World Tower, also in Songpa. Songpa is regarded as one of the four southern Seoul wards where housing prices are higher compared with other areas of the capital. (Yonhap)

The government decided to use a military-run golf course in northern Seoul as land for 10,000 new homes, but it will not open up other greenbelt zones in the Seoul metropolitan area to make more land available for housing, Hong said.

At the same time, the government will redouble efforts to root out speculative investment in the property market, Hong said.

"The government will conduct daily monitoring of the property market and sternly cope with activities that disrupt the market," Hong said.

The National Assembly will review tax measures to stabilize home prices later in the day.

Along with the tax measures, the supply measures are expected to stabilize home prices and protect first-time home buyers, Hong said.

Last month, the government announced its toughest measures yet to rein in rising housing prices, as a series of steps, including tax hikes and loan regulations, failed to put the brakes on soaring home prices.

Under the proposed tax measures, the government will raise property ownership tax rates for multiple-home owners.

This photo, taken on June 14, 2020, shows signs with prices for housing transactions put up at a real estate agency in Seoul. (Yonhap)

The current 0.6 percent to 3.2 percent ownership tax on people who own three or more homes will be raised to 1.2 percent to 6 percent, according to the ministry.

Companies that own multiple homes will face a 6 percent property ownership tax, it said.

The punitive tax rate will be applied to 0.4 percent of South Korea's total population, the ministry said.

Record-low interest rates and excess liquidity, which has been pumped into the market to help revive the virus-hit economy, have contributed to soaring home prices, analysts said.

Housing prices in Seoul and some adjacent cities have risen despite the government's efforts to cool the real estate market.

The Moon Jae-in administration has rolled out a series of comprehensive measures to stem rising home prices, but the regulations have only resulted in a short-term letup in housing prices.


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