10-15 Market Shock after Real Estate Measures, Impact of Expanded Land Transaction Permit System

10-15 real estate measures, what's different?

the third round of real estate measures announced by the government on October 15 is making waves in the market. the core of the measures are the expansion of the land transaction permit system and the upcoming real estate tax hike.

according to real estate YouTuber Park Min-soo, who goes by the name Genesis Park, the government's real estate policies go beyond mere regulation and are powerful measures that could shake the market structure itself. In particular, there are growing concerns that the wide-ranging regulations affecting even residential buyers could have unexpected side effects.

expanding the Land Transaction Permit System, the beginning of a market panic

the most shocking measure in the 10-15 Real Estate Measures is the Land Transaction Permit System, which was initially expected to be limited to areas with some development issues, but was actually expanded to 12 areas, causing the market to freeze.

in particular, it is a serious problem that even low- to mid-priced apartments in the 300 million to 400 million won range, such as those in Paldal-gu, Suwon, are subject to the land transaction permit system. mr. Park used the phrase "touching something that shouldn't be touched" and warned of the possibility of a polarizing outcome of shrinking transactions and new record prices.

in practice, when real estate regulations are tightened, transaction volumes plummet, but a small number of transactions occur at high prices in some popular complexes. this means a more unfavorable environment for the average buyer.

what's next for the real estate market?

so, how will the real estate market evolve in the future? Park analyzes that if the market is frozen and transactions are concentrated in a few popular complexes, those few transactions are likely to lead to record prices.

in the end, only high-income earners will move, while the rest of the market will take a wait-and-see approach, which has important implications for real estate investment strategies.

the policy is also expected to be a far cry from the real estate balloon effect during the Moon Jae-in administration, when there was a strong demand for investment to avoid regulation, but now the buying power has disappeared by more than half, and the acquisition tax penalty is still in effect, making it difficult to expect a return on investment.

park says it's fine if you're looking to live in the country, but if you're looking to invest, it's definitely a time to be cautious. in his view, rushing to judgment could come back to haunt you.

the tax bomb is quietly approaching, strategy for 2025

the government has yet to pull out the tax card in earnest, but market experts are predicting that the next regulatory tool will eventually be an increase in real estate taxes.

park Min-soo says that this government will not do it in the way of a sudden and massive increase in the property tax. given the controversy it has caused in the past, he believes it will not repeat the same mistake. instead, the government is likely to quietly increase the tax burden so that people don't feel it.

the cascading effect of higher stamp duty

the first thing that could be moved is the list price. park predicts that it will be gradually and slowly raised to 800 million won. the increase will trigger a cascade of increases in property tax, comprehensive real estate tax, and a total of 60 related taxes. before people realize it, everything will go up.

return of the fair market value ratio

in the case of the ad valorem tax, another variable is the fair market value ratio. this is a factor that affects the tax base, not the tax rate, and currently ranges from 60 percent to 100 percent, which the government can adjust autonomously.

it was raised to 100 percent under Moon Jae-in and lowered to 60 percent under Yoon Seok-yul, but Park believes it is likely to be raised back to the 80 percent level.

the combination of the price hike and the return of the fair market value ratio alone could result in a minimum 1.5-fold increase in property taxes and ad valorem taxes, and possibly as much as a 2-fold increase. when you get your 2025 real estate tax bill, he warns, you'll have to multiply by 1.5 or 2.

park emphasizes that now is the time to take a look at your holding structure in advance of the 2025 tax burden.

frequently asked questions

which regions are covered by the land transaction license system?

the Land Transaction Permit System has now been expanded to 12 regions, including areas with a high concentration of low- to mid-priced apartments centered on live-in residents, such as Paldal-gu, Suwon. in these areas, land transactions must be approved by the local city and county offices, and detailed information on the purpose of the transaction and financing plan must be submitted.

is it okay to invest in real estate now?

minsoo Park says it's okay to buy real estate for living, but be careful if you're looking to invest. currently, buying power has decreased significantly, and the acquisition tax is still in effect, so it is difficult to expect short-term investment returns. a cautious approach is needed, with a close eye on market conditions.

how much will real estate taxes rise in 2025

if the public price increase and the adjustment of the fair market value ratio occur simultaneously, the burden of property taxes and end-of-life taxes could increase by at least 1.5 times and up to 2 times. In particular, if the public price is increased to the level of 800 million won, it is expected that more than 60 related taxes will be cascaded.

will the real estate balloon effect return?

unlike during the Moon Jae-in administration, the affordability of real estate has decreased significantly, and the acquisition tax is still in effect. Therefore, it is unlikely that we will see the same balloon effect as in the past, but rather a polarizing phenomenon of a transaction freeze and the formation of a new record price for some popular complexes.

what will be the government's next real estate regulation?

park predicts that the next regulatory tool will be taxes. however, it is likely to increase the tax burden in a way that is harder for people to feel, by quietly adjusting the ratio between the posted price and the fair market value, rather than a sudden big increase.

closing thoughts

the 10-15 real estate measures are foreshadowing major changes in the market with the expansion of the land transaction permit system and the upcoming tax hikes. In particular, in 2025, the burden of property taxes and end-of-life taxes is expected to increase significantly due to the increase in the public price and the adjustment of the fair market value ratio. Whether you are a homeowner or an investor, it is important to take stock of your situation and prepare ahead of time.

what are your thoughts on the real estate market outlook and government real estate policies? Share your thoughts in the comments, and be sure to subscribe and set up alerts for more informative articles.