Reviving heavier taxes on multiple-home owners risks more turmoil without supply

 

Apartment complexes in Seoul are seen from a mountain fortress in Gwangju, Gyeonggi, on Oct. 15, 2025. [YONHAP]

 
President Lee Jae Myung has made it clear that the heavier capital gains tax on multiple-home owners will return. Since the Yoon Suk Yeol administration, punitive capital gains taxes on owners of multiple homes have been temporarily suspended. If the suspension is not extended, starting May 9, owners of three homes could face tax rates of up to 82.5 percent on capital gains. Few would dispute the logic of higher taxes amid soaring housing prices in Seoul. Yet, given the lack of policy consistency and the timing and method of the move, a sudden tax shock risks deepening market instability rather than calming it.
 
The first concern is consistency. President Lee has repeatedly said he would not try to control housing prices through taxes. On Jan. 23, however, he wrote on X, formerly Twitter, that extending the tax suspension was “not under consideration at all.” Two days later, he said it was a mistake to assume the law would be revised again to prolong the grace period. He added that while no government can defeat the market, no market can defeat the government either. That claim deserves scrutiny.
 
History suggests that progressive governments have rarely succeeded in managing real estate markets, especially through demand suppression. The Roh Moo-hyun administration introduced a comprehensive real estate holding tax, while the Moon Jae-in government imposed heavier taxes on multiple-home owners. In both cases, prices surged. The common failure was neglecting supply while focusing narrowly on curbing demand. A policy with one broken wing cannot prevail over the market, and the risk of repeating the same mistake remains high.
 

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President Lee has said that holding onto homes should not be rewarded. The warning implies that punitive taxes will take effect immediately after May 9. Yet, expecting homes to change hands within roughly 100 days is unrealistic. Even after the tax hike, the market could freeze, echoing the supply lockup seen under the Moon administration. If that happens, the tax burden may spill over into the rental market, hurting ordinary tenants rather than speculators.
 
Even more unsettling is discussion of reducing capital gains deductions for long-term, single-home owners. President Lee once stressed that people should not be forced to move because of taxes and even suggested easing gift tax burdens. Now, measures targeting so-called prime single homes are being floated. This diagnosis is misplaced. The concentration on one high-value home was itself a byproduct of punitive taxes on multiple-home ownership.
 
Since the Lee administration took office last June, several major housing measures have been announced. Yet, meaningful supply plans remain thin. The government must address housing with greater balance and carefully weigh side effects. Without expanding supply, wielding tax measures alone will not stabilize prices. The market may yield briefly, but it never does so permanently.


This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.