Oh Se-hoon: 'Raising Taxes Cannot Lower House Prices… Ordinary Citizens Bear the Brunt of the Damage'

▲ Seoul Mayor Oh Se-hoon

Seoul Mayor Oh Se-hoon has criticized the government's real estate tax code revision plan, warning that it is highly likely to intensify a "tax hell" where people face heavy levies whether they buy or sell a home.

Mayor Oh posted a message on his social media account today titled "The Biggest Victims of This Measure Are Also Ordinary Citizens."

Oh noted that while the government has consistently emphasized "expanding supply," the latest measures lack any plans to increase supply and only intensify taxes, arguing, "The problem is that raising taxes does not stabilize housing prices. Rather, it can make the market even more unstable."

He also expressed concern over policy side effects, pointing out that the core of the current tax overhaul appears to be the "long-term holding special deduction."

"Moving forward, it will be difficult to receive tax benefits simply by holding a house for a long time; beneficiaries must actually live in the house to qualify," Oh interpreted, adding, "The government has sent a signal to the market that people must pay more capital gains tax if they do not physically reside in their homes."

He predicted that, contrary to the government's expectations, listings in the ultra-luxury housing market will not increase significantly.

While the government expects higher taxes to flush out many listings into the market, the reality is that owners are likely to either keep holding properties despite the tax burden or put out only a few quick-sale listings, meaning listings will fall short of government expectations, he projected.

Mayor Oh went on to emphasize, "The bigger problem lies in the middle-class housing market and the jeonse and monthly rent markets."

Under the revised plan, landlords may find it more advantageous to evict tenants and move in themselves to reduce capital gains tax, which would in turn reduce jeonse (lump-sum lease) and monthly rental supplies while driving up rents.

"The greatest damage will not fall on homeowners, but on ordinary citizens and young people who need to find jeonse or monthly rentals," Oh stated.

He also took issue with the complexity of the real estate tax system.

"It remains unclear what single-home owners who must live in different regions due to work or livelihood should do, or to what extent exceptions will be recognized," Oh forecasted, adding, "A system that is difficult for both the public and experts to understand will ultimately breed only confusion and distrust."

He reported that new tax-saving maneuvers are already emerging in the market.

"Although the government claims it is targeting ultra-luxury homes, the market has already begun searching for 'less-pricey single homes' priced under 3.2 billion won. Instead of moving in the direction intended by the policy, the market is finding new ways to evade taxes," Oh said.

He continued, "As the president has stated that the goal is not to lower housing prices but to normalize the real estate market, solutions must also align with market principles. The surest way to stabilize the market is supply, not taxes," urging for an expansion of housing supply through redevelopment and reconstruction projects.

"We should no longer try to move the market with taxes," Oh stressed. "Even now, we must break away from patchwork tax measures and pivot toward fundamental real estate policies centered on supply."

(Photo provided by Seoul Metropolitan Government, Yonhap News)

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