Metropolitan Cities Excluded from Second Home Benefits

The government has expanded the regions eligible for 'second home' tax incentives to revitalize local real estate markets, but Busan was excluded solely because it is a metropolitan city. On March 14, the Ministry of Economy and Finance announced the 'Regional Construction Investment Enhancement Plan,' expanding second home eligibility from 'population decline regions' to include 'population decline concern regions.'

This measure newly grants second home benefits to nine areas including Gangneung, Donghae, Sokcho, and Inje in Gangwon Province; Iksan in North Jeolla Province; Gyeongju and Gimcheon in North Gyeongsang Province; and Sacheon and Tongyeong in South Gyeongsang Province. The second home system, introduced last year, provides property tax, comprehensive real estate tax, and capital gains tax exemptions equivalent to single-homeowner benefits when purchasing additional properties in regional areas.

However, despite Busan's Dong-gu, Seo-gu, and Yeongdo-gu being designated as population decline regions, and Geumjeong-gu and Jung-gu as population decline concern regions, the city was excluded from benefits due to its metropolitan status. The Ministry of Economy and Finance explained, "There are concerns that extending second home benefits to population decline concern regions in metropolitan cities could lead to housing price increases."

Crisis in Regional Real Estate Markets

The government expanded the official price cap for single-home tax benefits (capital gains tax, comprehensive real estate tax, property tax) in non-metropolitan population decline regions from 400 million won to 900 million won, and raised the acquisition price threshold for acquisition tax benefits from 300 million won to 1.2 billion won. However, regional metropolitan cities were also excluded from these measures.

The real estate polarization between the capital region and non-capital regions continues to intensify. As of the end of June, out of approximately 26,000 unsold housing units nationwide after completion, 83%, or about 22,000 units, are concentrated in regional areas. Busan alone has approximately 2,600 unsold housing units after completion.

The current tax system favors single-homeowners in Seoul over multi-homeowners in regional areas. Even assuming identical housing price appreciation rates, regional multi-homeowners must pay tens of millions of won more in capital gains tax. Multi-homeowner regulations introduced during past price surge periods have ultimately resulted in supporting only 'prime single properties' in Seoul while causing stagnation across all regional areas.

Structural Stagnation in Busan's Real Estate Market

Busan faces structural challenges of population outflow and weakening industrial foundation. As demand contraction becomes prolonged, real estate price declines and increases in unsold apartments continue.

While the capital region's presale market shows boom conditions, the construction industry slump in non-capital regions has reached severe levels. Progressive government measures are needed to reverse the accumulated years of regional real estate market stagnation.

Future Outlook [AI Analysis]

Extending second home benefits to Busan could likely bring an influx of living population and economic revitalization. Bold prescriptions are needed, such as reconsidering the metropolitan city exclusion clause, to ease the concentration of housing in Seoul and the capital region and revive regional real estate markets facing collapse.

However, if the government maintains its exclusion policy citing concerns over metropolitan housing price increases, the real estate stagnation in Busan and other regional metropolitan cities is expected to become even more prolonged. Urgent action is needed to resolve the contradiction between policy objectives of regional economic revitalization and population decline response, and the metropolitan city exclusion measure.