South Korea real estate tax reforms and LH debt concerns

South Korean President Lee Jae-myung has defended recent adjustments to the comprehensive real estate tax, rejecting criticisms that the moves constitute a retreat from reform. The government decided to maintain the basic deduction for non-resident single-home owners at 1.2 billion won, while increasing the deduction for actual residents to 1.4 billion won. The President emphasized that these changes reflect public and political feedback and should be viewed within the broader context of tax reforms targeting multi-home owners and high-value properties.

Separately, concerns are rising regarding the financial stability of the Korea Land and Housing Corporation (LH). Data indicates that the debt incurred per unit of integrated public rental housing supplied reached 288 million won last year, a 60.9% increase from 2021. This rise is attributed to the gap between increasing construction costs and stagnant government support units. With the government planning to expand public rental housing supply to 172,000 units next year, LH's debt ratio is projected to climb toward 262% by 2028, raising questions about the long-term sustainability of the housing supply strategy.