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Seoul mulls taxes to cool property surge

Amid concerns about a property market bubble in South Korea, the government yesterday proposed imposing heavier taxes on multiple property ownership and high-value real estate in measures aimed at cooling the country's red-hot real-estate market.

Since February, property values have risen sharply -- as much as 30 percent in certain areas of the capital, Seoul.

The surge has sparked concerns that property prices are rising too fast, and that a sudden collapse could damage the overall economy and cause financial sector insolvencies.

The government blames the jump on a shortage of land and homes available for sale. It also acknowledged that record-low interest rates have helped propel prices by encouraging people to buy property.

From January through July, apartment prices in southern Seoul, which has seen rapid development over the past two decades, rose 12.4 percent, faster than the inflation rate of 3 percent. Prices in northern Seoul rose 1.6 percent.

When prices in Bundang, on Seoul's southern outskirts, rose an average 28.9 percent on year in the first seven months, local media raised the alarm of a burgeoning property bubble ready to spread nationwide.

The plan, compiled by several ministries including the Ministry of Finance, also called for cutting the property transaction tax, releasing more land for housing, particularly in high-demand areas, and providing increased subsidies to increase home ownership.
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