Seoul real estate outperforms KOSPI and S&P 500 with 11.6% annual return

A study by the Korea Capital Market Institute reveals that Seoul real estate has outperformed major investment assets, yielding an average annual after-tax return of 11.6%. This rate exceeds the S&P 500 (7.1%), the KOSPI (6.0%), and national real estate averages (7.2%).

Researchers noted that the high concentration of South Korean household assets in real estate—currently around 65%—is a logical response to these high risk-adjusted returns. To foster productive finance and boost potential growth, experts suggest a strategic shift in asset allocation. The proposed goal is to reduce the real estate share of household assets from 65% to 50% over the next decade, while increasing the share of financial investment products from 8.5% to 20%.

To achieve this transition, the study recommends several tax reforms, including adjusting property holding taxes and providing incentives for capital flowing from real estate into the capital markets. Other suggestions include expanding Individual Savings Account (ISA) benefits, easing dividend income taxation requirements to encourage long-term investment, and implementing a unified taxation principle for various financial products such as funds, trusts, and ELS/DLS.