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S. Korea to add 132,000 housing units in greater Seoul area to stabilize home prices

SEOUL, SOUTH KOREA - FEBRUARY 7, 2020: A woman in a medical mask walks past a sign reading "I Love Seoul" in Gwanghwamun Square. The Chinese authorities registered an outbreak of the 2019-nCoV coronavirus in Wuhan in December 2019. Stanislav Varivoda/TASS. Sketched by the Pan Pacific Agency.

SEOUL, Aug 4, 2020, Yonhap. South Korea plans to supply 132,000 housing units in Seoul and its neighboring area, in the latest effort to stabilize home prices and ease fears of shortages, Finance Minister Hong Nam-ki said Tuesday, Yonhap News Agency reported.

The government will ease some construction rules, allowing redevelopment projects of aging apartment buildings to increase their floor area ratio to up to 500 percent to build more homes, Hong said.

Such redevelopment projects will also be allowed to build 50-story apartment buildings, Hong said.

Construction of the new homes will begin this year and be completed by 2028, Hong told reporters.

In particular, public housing units will be allotted for first-time homebuyers and young people, Hong said.

The government decided to use a military-run golf course in northern Seoul as land for 10,000 new homes, but it will not open up other greenbelt zones in the Seoul metropolitan area to make more land available for housing, Hong said.

The military base Camp Kim in central Seoul and an area owned by the Public Procurement Service in Seoul’s Gangnam Ward will be used for residential developments.

At the same time, the government will redouble efforts to root out speculative investment in the property market, Hong said.

“The government will conduct daily monitoring of the property market and sternly cope with activities that disrupt the market,” Hong said.

Also on Tuesday, the National Assembly approved three revised bills on hikes of real estate taxes, imposing heavier taxes on multiple-home owners to calm the market.

The current 0.6 percent to 3.2 percent ownership tax on people who own three or more homes will be raised to 1.2 percent to 6 percent, according to the ministry.

Companies that own multiple homes will face a 6 percent property ownership tax, it said.

The punitive tax rate will be applied to 0.4 percent of South Korea’s total population, the ministry said.

A property acquisition tax will be raised. If a one-home owner buys another home worth more than 600 million won (US$502,470), the owner should pay 8 percent of the price as an acquisition tax, compared with a previous tax rate of 1 percent.

If a two-home owner buys a third home worth more than 600 million won, the acquisition tax rate will be raised to 12 percent, according to the ministry.

Record low interest rates and excess liquidity, which has been pumped into the market to help revive the virus-hit economy, have contributed to soaring home prices, analysts said.

Housing prices in Seoul and some adjacent cities have risen despite the government’s efforts to cool the real estate market.

The Moon Jae-in administration has rolled out a series of comprehensive measures to stem rising home prices, but the regulations have only resulted in a short-term letup in housing prices.

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