Lee Jae-myung: Housing Speculation Crackdown

President Lee Jae Myung has launched a campaign to curb housing speculation, utilizing social media platform X to communicate his goals and exert pressure on the market.

“For the sake of a sensible and prosperous nation, I will rein in, by any means, real estate speculation that can ruin the country,” Lee stated in an X post on Feb. 3.

In a little over a month, he has posted more than twenty times on real estate, positioning it not merely as a property concern, but as a widespread imbalance in the national economy.

“Housing speculation robs young people of hope and harms the country,” he emphasized.

He appears committed to supporting his words with action. Lee has framed housing as a crucial part of a broader initiative to reform established systems, indicating that property will be no exception.

“Buying or selling homes is a personal freedom,” he wrote. “But whether that decision becomes profit or loss will be determined by government policy.”

He even placed his own residence on the market in late February, citing a responsibility to “set an example for everyone.”

This message is already impacting the market. In February, the Bank of Korea’s house-price outlook index registered its most significant decline since mid-2022.

Weekly data from the Korea Real Estate Board revealed that prices in Seoul’s most affluent districts – including Gangnam, Songpa, Yongsan, and Seocho – are declining, marking the first decrease in approximately two years.

Lee’s description of Korea as a “property-speculation republic” reflects an ongoing debate regarding whether housing has become more of an investment tool than a place to live.

One frequently mentioned factor is Korea’s *jeonse* system. Instead of monthly rent, tenants provide a substantial lump-sum deposit, which landlords can utilize to finance investments, frequently including the purchase of additional homes.

*Jeonse* has also facilitated “gap investment,” where buyers acquire properties with limited equity by leveraging tenants’ deposits to cover a large portion of the purchase price. In some instances, the deposit can constitute over half of the property’s value.

Multiple-homeownership is a primary target of Lee’s efforts to control speculation. Approximately 15 percent of homeowners own two or more properties, while the wealthiest 20 percent control nearly 80 percent of housing assets by value, according to a recent Oxfam Korea report.

Transaction patterns support this. Ministry data reveals that home sales increased by 13 percent nationwide in 2025, compared to 36 percent in Seoul and 43 percent for Seoul apartment transactions, demonstrating the high concentration of speculative demand in apartments and the capital region.

However, this diagnosis is contested. Kwon Dae-jung, a professor at Hansung University, advises against characterizing Korea as uniquely speculative.

“It’s hard to say Korea is especially speculative. Cities like New York or those in Australia have at times seen even larger price increases,” he argued, noting that housing prices tend to increase as urban economies grow and competition for housing intensifies.

Kwon also emphasized the importance of distinguishing between speculation and investment.

“Speculation usually refers to short-term buying and selling to capture capital gains,” he stated. Long-term ownership aimed at generating rental income, he added, aligns more closely with investment.

Lee contends that speculation has exacerbated structural imbalances throughout the economy.

“Home prices and rents have soared so high that young people are giving up on marriage and births are falling, putting the country itself at risk,” he wrote.

Seoul’s housing affordability remains a significant issue. The city’s price-to-income ratio was approximately 13.9 in 2024, meaning the average home costs nearly 14 times a household’s annual income.

Korea’s household balance sheet contributes to the distortion: Property accounts for about three-quarters of household wealth, significantly more than in countries like the US or Japan, where financial assets play a larger role. Property dependence also increases with wealth, reinforcing the perception that housing is central to both shelter and wealth accumulation.

Debt poses another risk. Korea’s household debt is about 90 percent of gross domestic product, among the highest of developed economies. Relative to income, leverage is even more pronounced, with household liabilities equivalent to roughly 175 percent of disposable income.

The imbalance is also geographic. Across OECD countries, housing in large cities was, on average, 86 percent more expensive than in very small cities in 2023, but in Korea the gap was 211 percent – the largest in the sample and the only one exceeding 200 percent.

Lee’s real estate initiative is occurring in conjunction with a dramatic resurgence in the Korean stock market, partly driving it.

The Kospi surpassed Lee’s 5,000 target in January, less than a year into his presidency, and exceeded 6,000 in late February, a surge his administration views as proof that capital can be shifted from property into equities.

One industry expert, who requested anonymity, suggested that the rally likely influenced the government’s timing.

“The fundamental idea of this administration is to reduce multi-home ownership and channel those funds into the capital market,” he said. “But because the stock market rose more sharply than expected, they also see a risk that the money could flow back into housing.”

Therefore, the crackdown is partially preemptive, intending to prevent a new wave of wealth from flowing into Seoul apartments while also encouraging a temporary increase in supply through sales by multiple-home owners.

October’s mortgage restrictions signaled this intention early on. The government’s Oct. 15 package limited mortgage amounts by price tier and tightened leverage rules in Seoul and other regulated areas, specifically targeting high-priced, investor-driven purchases.

With the Kospi at record highs – partly due to expectations linked to his policies – Lee is explicitly directing investors toward a different asset class.

“In the past, real estate was the only investment option. Now there are alternatives,” he wrote.

The next test of credibility arrives on May 9. The government has announced that the temporary deferral of higher capital-gains taxes for multi-home owners will end on that date, though some exemptions have been added: contracts signed by May 9 can still close within four to six months, depending on the district, under the previous tax regime.

Lee has coupled this deadline with exceptionally direct pressure.

“Even for the sake of the government’s credibility, we cannot allow those who held out to end up better off than those who sold before May 9,” he said. “We will make sure that choices made in defiance of government policy, or out of distrust of it, will not turn into profit.”

Once the suspension ends, the current 6-45 percent basic capital gains tax could escalate to as high as 82.5 percent of profits for owners of three or more homes. Finance officials are also considering stricter regulations on loan rollovers and refinancing for existing multi-home borrowers, making it more difficult to wait out the policy shift even without new purchases.

Lee has also suggested phasing out capital-gains advantages for registered rental homes after mandatory rental periods conclude. Within the ruling party, lawmakers have proposed more controversial measures, including higher holding taxes and narrower capital-gains exemptions, though these would require broader political agreement.

Longer-term supply solutions include 1.35 million housing starts in the Seoul metropolitan area by 2030, as well as a 60,000-unit fast-track plan on underutilized urban sites.

Kwon stated that Lee’s overall policy direction is appropriate in seeking to curb speculative demand and reduce multi-home ownership.

“But if too many abrupt changes are pushed through at once, that is not reform but revolution,” he cautioned.

“In cities like Seoul, prices are bound to keep rising, as they do in other major global cities, so the answer is to strike a balance: Tax unearned gains appropriately while making homeownership possible for ordinary households.”

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