Govt. announces diverse measures to revitalize nation's housing market
The government's new housing plan aims to encourage home buying and to stabilize monthly rent and jeonse prices, which have been soaring in recent years.
Jeonse is the unique Korean housing system, that requires renters to deposit a lump sum of money that is paid back when lease contracts expire.
Jeonse prices have skyrocketed recently to well over two-thirds the value of homes.
In an attempt to address the instability in the housing market, Korea's Ministry of Strategy and Finance, together with the Financial Services Commission and the Ministry of Land, Infrastructure and Transport, have come up with the joint measures.
"The recent hikes in jeonse price are attributed to depressed housing sales, and structural changes in the Korean housing market from jeonse to monthly rent. Responding to the current problems, the government aims to stabilize rent and jeonse prices, through a set of comprehensive financial measures. The government will do its best to protect the nation's lower-income earners."
According to the plan, the government will first reduce the home acquisition tax to one percent of the price of homes that are valued at less than 530-thousand U.S. dollars, and to three percent, of the price of homes that are valued at 800-thousand dollars or more.
Potential homebuyers in the lower-income bracket will be able to secure mortgages at a cheaper rate in the one percent interest range.
Given that current inflation rate stands in the three percent range, this is actually negative interest for homebuyers.
The government will also work toward supplying about 23-thousand public rental housing units during the latter half of this year, and offer more tax benefits for monthly renters, to lessen the financial burden on people switching from jeonse to monthly rent systems.
The measures come nine days, after President Park Geun-hye asked related ministries to come up with ways to stabilize the nation's housing market.
Park Ji-won, Arirang News.
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