Real Estate Outperforms S&P 500: Seoul Real Estate Yields Nearly Double Kospi Over 20 Years

Over the past 20 years, the average annual return on real estate in Seoul, factoring in taxes and opportunity costs, was nearly double that of the Kospi, data showed.

Experts noted that to shift domestic capital away from its heavy concentration in real estate and deposits toward innovative companies and cutting-edge industries, it is necessary to enhance the tax competitiveness of financial investment products and strengthen information transparency in the stock market.

At a conference held today in Yeouido, Seoul, marking the 29th anniversary of the Korea Capital Market Institute (KCMI), discussions focused on the role capital markets must play under the theme "Capital Markets Driving Innovation and Growth, and Tasks for the Transition to Productive Finance."

Senior Research Fellow Lee Hyo-seop of the KCMI and Team Leader Hong Byung-jin of the Customs Research Team at the Korea Institute of Public Finance (KIPF) presented a comparison of post-tax average annual returns of major assets over the past 20 years, incorporating various taxes such as holding taxes, capital gains taxes, and transaction taxes, as well as opportunity costs.

The analysis showed that real estate in Seoul yielded the highest return at 11.6%, followed by nationwide real estate at 7.2%.

The U.S. S&P 500 index recorded 7.1%, the Kospi 6.0%, and public funds 5.7%.

Senior Research Fellow Lee analyzed that "due to factors such as capital gains taxes on major shareholders and comprehensive income taxation on financial income, the relative attractiveness of domestic financial investment products is low, leading wealthier individuals to prefer overseas stocks."

He emphasized that shifting household assets from real estate to financial investment products requires narrowing tax gaps between real estate and financial investment products, between domestic and overseas financial products, and among domestic financial products.

Financial authorities also presented policy directions aimed at revitalizing the capital market and expanding productive finance.

Financial Services Commission Chairman Lee Eok-won evaluated that the global standing of the Kospi, which had long remained stagnant in a box-like trading range, has risen, while also pointing out that "rapid growth has brought shadows as well."

Chairman Lee stated, "Difficult challenges lie ahead, such as surging international oil prices triggered by events in the Middle East and pressures from rising global interest rates," adding, "The government will expand stock market dynamism while simultaneously strengthening the internal stability of the market by resolving accumulated vulnerabilities."

Reported by Jung Da-eun | Video by Lee Yu-jin | Graphics by Lee Su-min | Produced by SBS Digital News
※ Please note: This article was translated by AI and may contain errors.