SEOUL — South Korea on Wednesday unveiled a series of measures aimed at boosting falling property prices by cutting a number of taxes introduced in the early 2000s when the market was overheating. The move comes amid concerns over the housing market and construction sector as the global economic slowdown and a tighter budget stoke uncertainty. The Land Ministry said it will cut the levy to 6-35 percent on profits made from sales for people who own multiple homes, down from the 50-60 percent rate introduced in 2005. It also said it will boost support for first-time buyers by expanding loan scheme and loosen requirements on those hoping to enter state-sponsored home rental programs.
Rules imposed in 2002 on residents of Seoul’s real estate hotspots aimed at preventing them from selling properties too quickly were also lifted. “The excessive restrictions that were established when the market overheated will be eased as we try to normalize the housing market,” said the ministry.
“We are concerned the ailing construction sector … will deal a blow to the overall economy by cutting domestic demand and jobs.” Investment in the construction sector has steadily declined since the second quarter of last year while house prices have also sagged in recent months, it added.
The government will also support tenants by increasing the supply of rental property for lower-income people, providing cheaper loans and allowing for more construction of rental property within cities.
The average price of a home in Seoul and its suburbs, the country’s biggest property market, fell 1.7 percent in 2010, compared with an almost 22 percent hike in 2002. The price has remained nearly flat so far this year.