The South Korean government has introduced 22 rounds of measures to keep the property
bubble under control and 22 times, housing prices have continued to climb in Seoul.
Capital-gains taxes on properties resold after less than a year will surge from 40 percent
to 70 percent. Multiple home owners will also face taxes as high as 6% in speculative areas,...
up from 0.6 to 3.2 percent. But this plan,... coming less than a month
after the previous set of measures has been met by a wave of criticism that it's a huge
misstep that could backfire on people who aren't property speculators,... especially
as most South Koreans pour their lifelong savings into the property market.
Today, we discuss Seoul's unique property market and why this housing bubble is spiraling
out of control. We are joined by Yang Jun-sok, Professor of
Economics at the Catholic University of Korea and Daniel Yoo, Head of Global Investment
at Yuanta Securities.
1. Dr. Yang: Why are housing prices in Seoul
continuing to shoot up even during this economic downturn and COVID-19?
2. Mr. Yoo: Would you agree? It's a rather odd
phenomenon that's perhaps unique to Seoul. Compared to the U.S. and Japan where households
invest around 30 percent of their finances in the property market, South Koreans invest
around 80 percent. Why? Why are housing prices continue to soar?
3. Dr. Yang: It’s clear there’s a misalignment
between the market and real estate regulations. How has the government been misreading the
market? Why is supply so important?
4. Dr. Yoo: What do you make of its latest policy
to tax multiple property owners up to 6%? What are they intending to achieve and will
it really be effective in curbing speculation?
5. Dr. Yang: There are concerns that simply hiking
taxes will backfire on those who weren't even speculating and will drive up market prices.
Do you agree?
6. Dr. Yoo: The latest plan came less than a
month after the previous one there was even talk of opening up Seoul's greenbelt which
President Moon now says the government won't pursue. This seems to be confusing the market
and worrying a lot of homeowners. How should the government change its approach?
7. Dr. Yang: Is it even a good idea to try and
regulate the property market ? How do other governments handle massive property bubbles?
Like what happened
in the U.S. over a decade ago.
8. Dr. Yang: Some say other countries may follow
South Korea's aggressive crackdown on the property market. Is that likely?
9. Dr. Yoo: For
the time being, do
you think property prices will continue to spike in the capital area?
We'll have to wrap up the discussion here. Yang Jun-sok, Professor
of Economics at the Catholic University of Korea and Daniel Yoo, Head of Global Investment
at Yuanta Securities. Thank you for
your
insights