Lawmaker questions official housing price projection

Rep. Yoo Gyeong-joon of the main opposition People Power Party speaks during an inspection of the Gwangju Regional Tax Office by the National Assembly's strategy and finance committee at the regional government complex in Gwangju, Monday. (Yonhap)

Despite policymakers’ assurance of home prices having reached their peak, the government appears to have set tax revenue on a scenario of housing values rising further next year.

Rep. Yoo Gyeong-joon of the main opposition People Power Party on Thursday, quoting a state-funded study, said that the government’s tax revenue next year has been drafted based on its own estimation of housing prices in Seoul and the surrounding area growing 5.1 percent,

According to the study conducted by the Korea Research Institute for Human Settlements, housing prices in non-Seoul areas are expected to rise 3.5 percent.

The government using such an estimation of a further hike in housing prices contradicts its stance that the real estate market is on course for stability.

“The Finance Ministry must apologize for telling the public that house prices have hit a peak while internally expecting house prices to rise,” Yoo said.

Housing transactions in the Seoul metropolitan areas and rural areas next year will decrease by 17 percent and 14 percent, respectively, the data showed.

Based on the research institute’s projection, the government expected that it would generate less tax revenue due to a lower transaction volume despite the upward trend in prices expected to continue next year.

The ministry estimated it would collect some 22.4 trillion won ($19 billion) in capital gains tax on home sales, down 11.9 percent from what it projected when it drew up a second additional budget in July.

Meanwhile, the consumer sentiment index in September in the real estate market reached a value of 142.8, showing a decrease of 6.1 points from the previous month, according to data released by the human settlement institute on Tuesday.

Experts cautiously expect that the sizzling real estate market will start to cool down as weakened consumer sentiment shows that the effect of the government’s strengthened control of household loans has begun to kick in.

By Park Han-na(hnpark@heraldcorp.com)