The Problem Starts with the ‘Villain Narrative’

When the real estate market heats up, society quickly looks for someone to blame. That blame typically falls on “people who own multiple homes”—multiple-home owners. Intuitively, this makes sense. They buy multiple properties, drive up prices, take away opportunities for others to buy homes, and raise rents… This narrative sticks in people’s minds. So policy tends to lean toward “punishing” them: raising taxes, tightening loans, expanding regulated areas, and sometimes even sending messages about “forcing them to sell.”

But here’s where the first trap begins. Housing prices aren’t determined by “who’s more at fault.” Prices are set at the very thin intersection where “people who want to buy that property, in that area, at that time” meet “properties that are available for sale.” In other words, prices in the market aren’t set by the whole—they’re set by the ’last transaction.’ In this structure, hitting multiple-home owners harder doesn’t guarantee that the result will be “more supply and lower prices.” It could actually flip the other way: “even less supply comes to market.”

Moreover, multiple-home owners don’t monopolize the entire market. Looking at the latest housing ownership statistics, single-home owners account for 85.1% of individual homeowners, while those owning two or more homes account for 14.9%. Multiple-home owners aren’t an ‘overwhelming majority’ at the moment. When measured by household, households owning two or more homes make up 26%, but this is still a proportion within “households that own homes.” In other words, the single-cause frame of “if we just catch the multiple-home owners, prices will be solved” itself is easily exaggerated.

We need to change the question now. It’s not “Why don’t prices fall when we hit multiple-home owners?” but rather “What’s the engine driving up housing prices, and how does regulating multiple-home owners fail to stop that engine—or in some cases, make it run even faster?”

The Housing Price Engine is Interest Rates, Credit, and Expectations

The biggest lever moving housing prices is the ‘price of money.’ When interest rates fall, the same house has a larger ‘present value.’ Whether through loans or cash, people evaluate “the benefits they’ll receive someday (residence, rental income, future sale value)” by pulling that future value into the present. When the discount rate falls (= interest rate cuts), that future value is calculated as more expensive—this is basic financial grammar.

This isn’t just textbook talk. The Bank of Korea has stated in financial stability briefings that “the correlation between interest rates and housing prices is high, and it’s clear that interest rate cuts act as a factor raising housing prices.” They also mention non-linearity: in a phase where rates have already been cut multiple times, the impact of the same magnitude cut on housing prices can grow larger as ’the rate level gets lower.’ The point is simple: when rates fall, pressure on housing prices increases.

On top of this come credit (loans) and expectations (psychology). Even when loan regulations are strict, if there’s ‘pure cash’ demand remaining, prices won’t move as desired. Asset markets are always about “those who can buy” making the price. This is especially true for popular products in popular areas. In fact, the Bank of Korea has analyzed that Seoul’s cash purchase ratio is increasing, with high-income groups concentrating in preferred areas (a kind of ‘one really solid home’).

And finally, expectations. The stronger the belief that “if I don’t buy now, it’ll get more expensive,” the higher a price people will tolerate. The Bank of Korea has assessed that while policy effects may slow transaction volumes, the slowdown in price increases is limited, and expectations for price increases may still be at high levels. Strangely, these expectations can also grow during ‘supply measure announcements.’ While supply measures can sometimes act as psychological stabilizers, if they’re read as “Oh, the government is increasing supply? That means there’s a shortage now,” they can actually stimulate expectations further. This is especially true when the time to groundbreaking and move-in is long.

To summarize: before we even consider whether multiple-home owner regulations are strong or weak, if the engine of interest rates, credit, and expectations is running in an upward direction, housing prices can rise. And multiple-home owner regulations aren’t a tool that ‘directly’ shuts off this engine. Instead, through indirect pathways, they might make the market even more rigid.

Taxes Hit ‘Supply Volume Coming to Market’ First, Not Prices

The core tool of “punishing” multiple-home owners is usually taxes. Particularly a combination of transaction-stage taxes (capital gains tax, acquisition tax, etc.) and holding-stage taxes (property tax, comprehensive real estate tax, etc.). There’s a point that’s often missed here: taxes create a response first in ’transactions,’ not ‘prices.’

When transaction taxes rise, people sell less. This seems obvious, but it’s the door to paradox. When transaction taxes increase, the housing market sees reduced liquidity and locked-up supply. Then prices move not toward “stability due to no transactions” but toward “higher prices due to no transactions.” In a market where one or two transactions set the price, when supply (listings) decreases, prices become more sensitive upward.

Korean research has empirically demonstrated this mechanism in a policy study by the Korea Development Institute on the effects of capital gains tax strengthening. According to the research summary, when capital gains tax strengthening for multiple-home owners was announced or implemented, transaction behavior changed—with transactions and gifts temporarily increasing before implementation, then a ’lock-in effect’ where sales transactions contracted after implementation. This means taxes can work as “making people not want to sell” rather than “making people sell.”

The OECD organizes the context similarly. Reports point out that the higher the reliance on transaction taxes (real estate acquisition and transfer stage taxes), the more residential mobility (and even some labor mobility) can fall. This is because transaction costs increase, so people move less.

In Korea’s institutional environment, this ’not selling’ appears in more complex ways. A National Assembly Budget Office research report organizes that in situations where capital gains tax heavy taxation is strengthened, taxpayers may have greater incentives to choose “holding rather than selling,” or to gift to children to reduce housing numbers, or to respond through methods like rental business registration or corporate transfers. Rather than increasing ‘sale listings’ in the market, higher taxes may increase ‘alternative behaviors.’

For property holding taxes, another pathway opens. There’s an expectation that “if we raise holding taxes to increase the burden of ownership, won’t they put homes on the market?” But for properties that can be rented, there’s also room for that burden to be passed on to rent. The Korea Research Institute for Human Settlements found that when a comprehensive real estate tax increase shock occurs, jeonse (lump-sum deposit lease) prices rise for up to 2 years, suggesting that the tax burden can be passed on to tenants.

This creates the pathway: “punishing multiple-home owners → rent increases → stimulating purchase demand.” When rents rise, especially when jeonse and monthly rent burdens increase, some households move toward “might as well buy.” That demand pushes up sales prices again. A ‘boomerang’ becomes possible where multiple-home owner regulations reduce purchase demand in the sales market by as much as they increase anxiety in the rental market, actually reviving purchase demand.

Ultimately, multiple-home owner taxes aren’t “a magic hammer that directly hits prices.” If the operating pathway goes wrong, the market can become more expensive and more unstable through the combination of “reduced transactions (locked supply) + rent pressure + concentration in preferred areas.”

Between Announcement and Move-in, Supply Measures Have a River of Time

The most repeated optical illusion in housing policy is the misconception that “announced supply = immediately increasing homes.” In reality, there’s a long time from announcement → candidate site confirmation → plan establishment → permits/feasibility → groundbreaking → completion/move-in. While this river of time flows, the market calculates both ‘current shortage’ and ‘future promise’ into prices simultaneously. The more distant the promise, the more current prices fluctuate.

Looking at a recent case makes this clearer. The ‘Plan for Expanding and Accelerating Urban Housing Supply’ announced jointly by related ministries on January 29, 2026, promises to supply 60,000 units in urban areas. But the data itself specifies “52,000 units excluding Yongsan pre-planned volume.” In other words, the number ‘60,000 units’ includes some existing planned volume, and the net increase (purely newly added volume) is less.

Looking more closely at the face of supply, it’s closer to “a patchwork of various sites” rather than “a few large blocks.” The summary table contains 43,500 units utilizing public sites in urban areas (volumes separately noted in parentheses), 6,300 units in new public housing districts, and 9,900 units from complex development of 34 old government buildings, totaling 59,700 units (52,300 units in parentheses). Looking at ‘old government building complex development’ alone, individual projects are divided into many small scales like 0.02 thousand units (20 units) to 0.9 thousand units (900 units). The intuition that piecemeal supply of 600-900 units can’t end a “supply drought” in the short term comes from here.

Moreover, ‘when’ is key. The same material specifies pursuing with maximum speed, aiming for housing groundbreaking starting from 2027. If you talk about 2027 groundbreaking to stabilize 2026 market prices, the market translates it like this: “So 2026 will be even tighter?” This is where supply policy, while ’necessary long-term,’ can work in reverse on ‘short-term prices’ through psychology and expectations.

In fact, the short-term market is already moving. Looking at the Korea Real Estate Board’s weekly apartment price trends report (4th week of January 2026, as of 1.26), nationwide sales prices rose 0.10%, Seoul rose 0.31%. Jeonse prices also rose 0.09% nationwide and 0.14% in Seoul. These numbers show the reality that supply is in future tense while prices move in present tense.

When the Rental Market Shakes, the Sales Market Shakes Too

If you think policies that strongly pressure multiple-home owners only target the sales market, you’re only seeing half the picture. In Korea’s housing reality, the rental market isn’t a simple ‘subsidiary market’—it shares fuel with the sales market. When jeonse is unstable, sales stir; when sales rise, jeonse is also stimulated. (Jeonse deposits are essentially massive ‘housing finance.’)

Official housing statistics clearly show the ‘monthly rentalization’ of leases. As of December 2025, jeonse transaction volume was 87,254 cases, while monthly rent (including deposit-based monthly rent and semi-jeonse) was 166,895 cases, which is larger. The same data presents that the annual cumulative (January-December) monthly rent transaction ratio is 63.0%, with an upward trend: 2021 43.5% → 2022 52.0% → 2023 54.9% → 2024 57.6% → 2025 63.0%.

This change isn’t explained by stories like “landlords prefer monthly rent because they’re nice.” When the interest rate environment (return on operating jeonse deposits), regulations (blocking gap investment), holding burdens (taxes, risks), and ‘incentives to maintain jeonse volume’ are comprehensively shaken, jeonse decreases and monthly rent increases. Monthly rentalization easily raises tenants’ perceived housing costs quickly (monthly cash flow), making the option to “just buy” more attractive to households above a certain income level. In other words, pressure in the rental market becomes a pump reviving purchase demand.

When policy is added, the pathway becomes more complex. For example, as transaction tax (capital gains tax) pressure increases, supply can be locked up, and as holding tax pressure increases, incentives for rent pass-through can arise. If, as the Korea Research Institute for Human Settlements analyzed, comprehensive real estate tax increase shocks can push up jeonse prices, that jeonse instability spreads back to the sales market. The paradox is created here where “punishing” multiple-home owners, rather than lowering sales prices in the short term, stimulates purchase demand through rental instability.

To Summarize, Housing Prices Aren’t Something You Lower by ‘Hitting People’

Compressing the core into one sentence: policies that hit multiple-home owners often shock ’transactions’ and ‘rentals’ first, rather than ‘prices.’ And when transactions decrease and rentals become unstable, prices more easily rise rather than fall.

Organizing more structurally, reasons why housing prices rise are built in three layers.

First, when interest rates, credit, and expectations turn upward, the market basically goes up. The central bank clearly acknowledges that interest rate cuts are a factor raising housing prices. Second, multiple-home owner regulations (especially transaction tax strengthening) can work as ‘making people not sell’ rather than ‘making them sell.’ Empirical research reports behavioral changes like sales transaction contraction (lock-in effect) after capital gains tax strengthening. Third, supply is slow. “60,000 units” may be a symbolic number, but the net increase volume is smaller, many are small-scale projects, and if the groundbreaking goal is from 2027, it’s hard to immediately eliminate the perceived shortage in the 2026 market.

So the belief that ‘hitting multiple-home owners should lower housing prices’ keeps breaking. This is because the market isn’t a moral court—it’s a calculator where scarcity meets the price of money. And that calculator sometimes interprets the act of “hitting” itself as a signal that ‘it could become more scarce in the future.’ This is especially true in phases where supply is slow, transactions are frozen, and rentals are unstable.

Finally, one more point: the predictability of policy is also part of the price. When tax systems and regulations change frequently, people insert “when will it change again” into prices. As the National Assembly Budget Office report points out, the more complex the system and the more exceptions, the lower taxpayers’ predictability, and in that process, bypass behaviors like holding and gifting can increase. Long-term, this also damages policy credibility.

References

• Weekly Apartment Price Trends, 4th Week of January 2026 (Korea Real Estate Board Press Release, 2026-01-29)
• 『Plan for Expanding and Accelerating Urban Housing Supply』(Joint Related Ministries, 2026-01-29)
• December 2025 Housing Statistics (Ministry of Land, Infrastructure and Transport Press Release, 2026-01-30)
• 2024 Housing Ownership Statistics Results (Statistics Korea/National Data Office, Posted: 2025-11-14)
• Financial Stability Situation (September 2025) Press Conference Q&A (Bank of Korea)
• “Understanding Recent Liquidity Situations” (Bank of Korea Blog)
• Economic Effects of Capital Gains Tax on Housing (Korea Development Institute Policy Research Introduction/Abstract)
• Research on Problems and Improvement Plans for Housing Capital Gains Tax (National Assembly Budget Office Research Final Report, 2025-04)
• Market Impact of Real Estate Tax System and Future Policy Directions (Korea Research Institute for Human Settlements Press Release, 2023-10-31)
• Housing Taxation in OECD Countries (OECD, 2022 and summary page)