Koo vows additional housing, financial measures; eyes targeted loan relief for ordinary homebuyers

Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol said Friday he is considering targeted loan relief to ease the burden on ordinary homebuyers and pledged to announce additional measures soon.

Speaking in a phone interview on MBC Radio's "Kim Jong-bae's Focus," Koo said protections for ordinary, end-user buyers — including young people, newlyweds and those without homes — need to be eased somewhat. His remarks came after the host raised the argument that loosening loan restrictions is necessary because, as things stand, only cash-rich buyers can purchase properties in Gangnam.

"Additional housing supply measures and financial measures will follow," Koo said. He added that because apartment construction takes time, the government will expand the supply of non-apartment housing and make an all-out effort to address the financial difficulties facing newlyweds and young people.

On the recently announced tax reform package, Koo said the government had sharply reduced the tax burden for single-home owner-occupiers with properties valued at up to 3 billion won ($2.11 million).

"If you hold a 3-billion-won home for more than 10 years and then sell it, both the property holding tax and the capital gains tax burden will be eased," he said. Under the plan, single-household homeowners will be exempt from the comprehensive real estate tax on properties valued up to 2 billion won, and those in the 2-billion-to-3-billion-won range will also see reduced tax burdens. Properties in the 3-billion-to-4-billion-won range will face a gradual increase, while ultra-high-end homes valued at 4 billion won or more will be subject to a normalized — that is, higher — tax burden.

Koo said a 3-billion-won home and three 1-billion-won homes represent the same asset value, yet many people had said multi-home owners face a far heavier tax burden. "The overwhelming majority called for a shift to a value-based standard," he said.

Asked how the government defined the threshold for ultra-high-end properties, Koo said the normalization of tax burdens in the 4-billion-to-5-billion-won range aligns with what the market generally understands by that term. He explained that the system was designed to protect owner-occupiers of homes valued at 3 billion won or less — roughly 99 percent of all housing — while normalizing the burden on ultra-high-end properties above that level.

On the phased application of the surcharge on capital gains tax for multi-home owners, Koo drew a clear distinction between the measure and a simple deferral. "This is a temporary easing, not a postponement," he said.

He said the phased approach reflects public calls for time to adjust as property holding tax burdens rise. Under the plan, owners of two homes will see a 5-percentage-point surcharge added to the standard rate starting next year, rising to 10 percentage points in 2028 and 20 percentage points from 2029 onward. Owners of three or more homes will face surcharges of 10, 15 and 30 percentage points applied in sequence. "It is a temporary easing of the heavy tax, not a deferral," Koo said.

Koo also left open the possibility of further revisions to the tax reform package. "During the public notice period and the National Assembly deliberation process, I intend to listen carefully to public opinion and reflect what is reasonable and necessary," he said.

On a proposal to reduce capital gains tax for people aged 65 or older who sell their homes in the greater Seoul area and relocate outside it, Koo said the measure is "an incentive based on choice, not compulsion." The government plans to offer a 50 percent capital gains tax reduction — capped at 500 million won — for those who relocate next year, and a 30 percent reduction — capped at 300 million won — for those who move the following year.

Regarding the five-year maturity set for the youth individual savings account (ISA), Koo said the term is intended to allow periodic checks on whether account holders remain below the threshold for comprehensive financial income taxation. "If they are not subject to it, the maturity can be extended — so it does not automatically terminate after five years," he said.

On the so-called share-price suppression prevention measures, Koo said the government will review both its own policy intent and market feedback, and refine the measures during the public notice period and National Assembly discussions.

"There are policy considerations the government has weighed, and there are views coming from the market," he said. "I will listen carefully and find the most reasonable approach."

On additional measures for leveraged exchange-traded funds (ETFs), Koo said trading volume has normalized to some degree and concentration risks have eased since the minimum deposit requirement was tightened. "We will monitor the effects further and respond as the situation warrants," he said.