President Lee Jae Myung has turned to social media to denounce people who own multiple homes, calling them the main culprits behind soaring apartment prices and deepening supply shortages in Seoul and nearby areas. On Jan. 23, Lee declared a war on multi-home owners by posting a message on X, formerly Twitter, saying that the government will end the temporary suspension of heavy capital gains tax on them. As a result, people owning more than one house will face up to an 82.5 percent capital gains tax on houses sold after May 9.

After multi-home owners, Lee went after those who hold a single house but do not reside in it, threatening to impose heavier property holding taxes. He also targeted registered landlords who rent homes below market rates in exchange for tax benefits, instructing his Cabinet to curb loan extensions for multi-home owners.

The series of posts urging homeowners to sell caught many off guard, as Lee, a former governor of Gyeonggi Province, had previously said that tax policy should be used only as a last resort. During last year’s presidential campaign, he pledged not to raise real estate-related taxes, promising instead to expand housing supply in areas where demand is strongest to lower homeownership costs.

Lee appears to have stepped in personally after being briefed on a government housing supply plan unveiled Jan. 29 that aims to provide 60,000 homes in Seoul and Gyeonggi Province. The president was aware that the plan would likely have limited impact, similar to three earlier measures announced on June 27, Sept. 7 and Oct. 15 last year. It seems that the president had no other choice but to take up the fight because the government simply cannot produce a supply plan capable of easing public anxiety over the prolonged housing shortage.

Despite a 600 million won ($400,000) cap on housing loans, a pledge to supply 270,000 homes annually through 2030 in Seoul and the greater capital region, and expanded speculation zones covering all of Seoul and parts of southern Gyeonggi Province, apartment prices in Seoul rose 8.98 percent in 2025 from a year earlier. It marked the sharpest increase since 2006, when prices jumped 23.46 percent, according to the state-run Korea Real Estate Board (REB).

Lee and his aides insist the outcome will be different this time, expressing confidence that he will avoid the fate of former liberal Presidents Roh Moo-hyun and Moon Jae-in, both of whom failed to rein in home prices despite sweeping regulations. The Lee administration says it has additional policy tools to make purchasing and holding apartments more difficult and costly.

There are early signs of an effect. The number of apartments listed for sale in Seoul rose to 67,725 as of Sunday, up 20.4 percent from 56,219 on Jan. 23, when Lee announced the tax change, according to real estate data platform Asil. Weekly price growth slowed to 0.15 percent in the third week of February from 0.22 percent a week earlier, REB data showed.

Still, questions remain over how long Lee’s threat of imposing higher property holding and capital gains taxes will restrain prices. After May 9, multi-home owners may have little incentive to sell, potentially tightening supply again. Combined with a chronic shortage of new apartments, a decline in listings could push prices higher in Seoul and Gyeonggi Province unless demand weakens.

New housing supply is projected to shrink sharply. The number of new homes available for occupancy in Seoul is expected to fall by 47.6 percent to 24,462 in 2026 from 46,710 a year earlier, according to the REB. The shortage is likely to persist into 2027 and beyond.

Land for new development in Seoul is scarce, making homeownership highly competitive. The most viable option for adding supply is the redevelopment and reconstruction of aging apartment complexes and low-rise neighborhoods.

But such projects face regulatory, administrative and socioeconomic hurdles, fueling skepticism over the government’s supply plans announced Sept. 7 last year and Jan. 29 this year.

Demand, meanwhile, is projected to keep rising. The number of households in Seoul is forecast to increase to 4.27 million by 2038 from 4.08 million in 2022, according to government data. Households headed by people in their 20s and 30s without homes reached a record 992,856 in 2024, up from 799,401 in 2015, suggesting a sizable pool of potential buyers.

Unless the government significantly expands housing supply in the capital region, tax measures and rhetoric alone are unlikely to keep apartment prices from resuming their upward climb. The panic buying that we all saw last year may well return.

Lee Hyo-sik is finance editor at The Korea Times.

© The Korea Times