South Korea

이재명 정부 부동산 정책, 조급함이 지나칩니다 [심형석의 부동산정석]

Hankyung | Local Language | News | Dec. 4, 2025 | UndeterminedReal Estate

The Lee Jae-myung administration has introduced three rounds of real estate policies within six months, implementing broad regulations more severe than those of the previous Moon Jae-in government. These policies include a uniform loan cap of 600 million won and reduced loan-to-value (LTV) ratios down to 40% in speculative zones, which disproportionately affect households with high incomes but limited assets, as well as low-income non-homeowners who face stricter debt service ratio (DSR) limits and reduced policy loans.

These measures fail to differentiate between genuine homebuyers and investors, infringing on rights related to housing and residence changes. The administration’s approach contrasts with earlier efforts to apply “pinpoint” regulations to specific neighborhoods, which minimize market side effects. Instead, broad and radical policies have been implemented rapidly, leading to unintended consequences.

One major negative impact is the sharp decline in housing listings, particularly in Seoul, where listings fell from about 92,000 to 59,641 by December 1, 2025. This decrease, triggered by expanded regulated zones, reduces supply at a time when new housing supply will be limited until 2028, exacerbating market imbalances. As supply shrinks faster than demand, housing prices have risen, contrary to policy intentions.

The article concludes that excessive government control disrupts the housing market, which requires careful management rather than heavy-handed supervision. Past demand-suppression policies under Moon Jae-in also failed, culminating in sharp price increases in 2021. With widespread regulation now in place, it is uncertain if further effective policy tools remain to stabilize the market.

모든 기업 법인세 1%P 오른다…금융사 교육세는 두 배로

Hankyung | Local Language | News | Dec. 4, 2025 | Regulation

Starting next year, corporate tax rates will increase by 1 percentage point across all company brackets, including small and medium-sized enterprises. The progressive tax rates will rise from 9% to 10% for incomes up to 200 million won, 19% to 20% for 200 million to 20 billion won, 21% to 22% for 20 billion to 300 billion won, and 24% to 25% for over 300 billion won. This change, part of the 2026 budget and tax reform plan approved on December 2nd, aims to raise government revenue by 18.482 trillion won over five years, despite opposition from the People Power Party, which sought to exclude smaller enterprises.

The education tax on financial companies with profits exceeding 1 trillion won will double from 0.5% to 1.0%. Despite industry's requests to use alternative criteria such as total assets or profits, the government maintained the profit threshold as the basis for this tax increase.

Quasi-members of mutual finance institutions like Nonghyup, Shinhyup, Suhyup, and Saemaeul Geumgo who wish to receive tax exemption benefits must now have total wages of 70 million won or less, an increase from the previous 50 million won limit. This adjustment responds to concerns that the tax exemption system had been misused by higher-income groups and that stricter limits could harm local financial institutions and their role in supporting agricultural and fisheries sectors. The reform also includes separate taxation of interest and dividend income for members exceeding the wage threshold, starting at 5% next year and rising to 9% in 2027.

Joongang Ilbo | English | News | Dec. 4, 2025 | UndeterminedInflation

South Korea's consumer prices increased by 2.4 percent in November 2025 compared to the previous year, marking the highest year-on-year rise for 2025 for the second consecutive month. This steady inflation rate matched October's figure and followed a period of slower growth earlier in the year. The weakening of the won against the US dollar significantly contributed to this rise, particularly affecting petroleum prices, which saw a 5.9 percent increase overall. Diesel prices jumped 10.4 percent and gasoline by 5.3 percent, even though global oil prices declined by 11.2 percent. The government’s reduction of fuel tax cuts in November also influenced the price increases.

Food prices, especially for agricultural, livestock, and fisheries products, rose sharply by 5.6 percent in November, the steepest monthly increase since June 2024. Imported fruits such as kiwis and mangoes increased in price by 12 percent and 8.8 percent respectively, while imported beef prices rose 6.8 percent. Seafood products like beltfish, mackerel, and yellow croaker experienced significant price hikes, partly due to a decrease in domestic supply and the weak won. The living necessities index increased by 2.9 percent, driven by a 3.7 percent rise in food prices. Notably, rice prices grew 18.6 percent year-on-year, though at a slower pace than in October, and tangerine prices surged 26.5 percent due to stronger demand and improved quality.

Government officials anticipate continued inflationary pressure from the weak won and higher import costs, particularly affecting petroleum, agricultural, livestock, and seafood products sensitive to exchange rate fluctuations. These rising input costs could also lead to higher prices for processed foods, dining out, and durable goods reliant on imported raw materials. The government pledged to closely monitor the inflation situation and implement measures to stabilize consumer prices moving forward.