Who benefits when house prices fall? For young people, it became those looking for a room; for the government, it became those buying them up. President Lee Jae-myung stated during a cabinet meeting on the 3rd that "actual transaction prices in major regions are dropping to a surprising degree," emphasizing the sharing of accurate data. He also wrote on X (formerly Twitter), "For the people and the country, the myth that real estate never fails is now due to be broken." And he added one line: countermeasures, including massive government purchases for public rental housing use in the event of a significant drop in house prices, are already being prepared.
Few would raise objections to the drop in house prices itself. Properties for sale in Seoul apartments have increased rapidly while transactions have decreased. The problem is the response. On the same day, the President stated, "Escaping the ruinous real estate speculation republic is more important than the fate of the administration," while also revealing a scenario where, if the decline worsens, the government would throw money back into the market to set a floor. The question of this article is whether these two sentences—a government emphasizing data disclosure yet stepping in as a buyer during a downward market—can coexist without conflict.
Tax laws are moving in the same direction. The National Assembly's Strategy and Finance Committee held a public hearing on real estate tax system reforms on the 3rd. Kim Woo-chul, president of the Korean Association of Public Finance, pointed out, "It is difficult to describe the plan to concentrate the tax burden on non-resident homeowners as fair taxation reform, and there has been neither the publication of research results nor a policy public hearing regarding the major shift in standards known as punitive taxation." Kim In-man, head of the Real Estate Economics Research Institute, defined this reform package as "the state's tax violence experiment targeting citizens," attacking the rationale of collecting an additional 2 to 3 trillion won in comprehensive real estate holding taxes when excess tax revenue is projected at 60 trillion won this year and 100 trillion won next year. He added, "If holding taxes are raised, jeonse listings disappear and wolse skyrockets."
Proponents also have clear arguments. Kang Sung-hoon, a professor of public policy at Hanyang University, positively evaluated the intent to reflect tax-paying capacity—describing it as a shift toward prioritizing housing value and actual residency rather than the number of houses—while also acknowledging the possibility that the burden of holding taxes could be passed on to rents and its impact on the jeonse and wolse market. Oh Jong-hyun, head of the Korea Institute of Public Finance's division, also agreed with the direction of the government's proposal, but suggested phased implementation and monitoring. The conclusion of the debate is not yet reached, and the reform proposal has a long way to go before being handled in the National Assembly.
Budget reviews also begin in earnest today (the 4th). The National Assembly's Special Committee on Budget and Accounts will enter two days of comprehensive policy questioning, kicking off the review of next year's budget bill amounting to 820.9 trillion won. The ruling party proposed increases in four major areas: infrastructure, local regions, people's livelihoods, and safety, while the opposition proposed cutting about 27 trillion won in pork-barrel budgets and increasing 11.6 trillion won in the youth and safety sectors. Regarding the 162 trillion won future response fund, the ruling party aims to utilize it for future growth industries, while the opposition counters by completely slashing the 104.4 trillion won in surplus funds to use them for repaying national debt. The legal deadline is December 2nd.
Summarized from the perspective of youth, it is as follows. The decline in house prices is a rare opportunity to restore the youth housing ladder and a process of normalizing the speculation republic. However, if the government steps in as a buyer to "manage" the downturn, a new fiscal burden arises where state taxes prop up fallen prices, and the market's bottom will be determined not by the market itself, but by the government's wallet. Warnings have already been raised at public hearings that punitive holding taxes will ultimately return on the youth's jeonse and wolse bills through rent passing. The President's remark that "it is the government's role to trust the market and respond based on accurate information" and the countermeasure that the government will buy if houses fall are irreconcilable. The question that is being buried, rather than asked by the government, is this: Whose tax money funds the massive purchases, and whose property do those houses become?
