South Korea considers tougher property taxes as Gangnam prices surge

South Korean finance minister Kim Dong Yeon said the government will mull strengthening property ownership taxes after public opinions are collected on the proposal.
South Korean finance minister Kim Dong Yeon said the government will mull strengthening property ownership taxes after public opinions are collected on the proposal.PHOTO: REUTERS

SEOUL (REUTERS) - South Korea's finance minister said on Friday (Jan 26) the government may consider slapping tougher taxes on property ownership after a string of measures to rein in speculators failed to calm surging prices in wealthy parts of Seoul.

Questioned by reporters at a seminar in Seoul, Kim Dong Yeon said the government will mull strengthening property ownership taxes after public opinions are collected on the proposal.

"A considerable part of the (rise) in Gangnam home prices seems to be based on speculative demand," Kim said, referring to the wealthy Seoul district.

Kim's comment comes as political pressure mounts to raise levies on property ownership amid worries speculative demand in main regions of the country are stoking a bubble and encouraging binge borrowing.

Seoul home prices continued to rise through fresh mortgage curbs announced in October last year, which includes tightened loan limits for owners of multiple homes.

Home prices in the capital rose 0.3 per cent last week from the week before, far outpacing moves in national prices, data from KB Kookmin Bank shows.

In South Korea, taxes on property transactions, such as capital gains taxes, are much higher than taxes on property ownership.