South Korea is poised to recalibrate its approach to cooling the nation’s heated housing market, shifting away from punitive measures targeting multi-homeowners and towards strategies focused on increasing housing supply. The move signals a potential turning point in government policy, acknowledging the limitations of demand-side controls and prioritizing the construction of new homes.
The government is expected to announce revisions to capital gains taxes on multiple homeownership as early as this week, according to reports. However, officials have indicated that the changes will not represent a broad easing of regulations, but rather a strategic repositioning to facilitate a more fundamental solution: boosting the overall housing stock. This suggests a recognition that simply discouraging investment has not been sufficient to address the underlying imbalance between supply and demand.
This shift in strategy comes after years of attempts to curb speculation and rein in soaring property prices, particularly in the Greater Seoul area. Previous policies focused heavily on tightening lending restrictions, increasing property taxes for multi-homeowners, and designating land transaction permit zones. While these measures may have had some impact on dampening short-term speculation, they have failed to deliver lasting affordability or significantly increase the availability of housing.
In September 2025, the government unveiled an ambitious plan to add 1.35 million new homes nationwide by 2030, a clear indication of a growing emphasis on supply-side solutions. The plan, announced at the Seoul Central Government Complex, included the establishment of a new relocation public office designed to streamline the housing supply process. Officials set an annual target of 270,000 new units in the capital region alone.
Gu Won-cheol, head of the Gyeongbuk Provincial Government Planning Department, articulated the government’s new resolve, stating, “We will push forward with a speed war on housing supply.” He emphasized that “sufficient supply is essential” for the fundamental stability of the housing market, signaling a departure from previous approaches that relied more on managing permits and approvals than actual construction. The focus, he explained, will now be on the number of units actually started, not just approved, to ensure tangible results.
The emphasis on increasing supply aligns with recent academic research suggesting that supply-based interventions are more effective than tax-based demand-side approaches for cooling overheated housing markets without negatively impacting consumer welfare. A study published in April 2024 by the Annals of Regional Science found that investing in housing construction leads to 3.4–4.1% lower housing prices and 1.5–1.8% enhanced welfare. In contrast, the study indicated that tax-based demand-side approaches resulted in a 1.8–2.2% housing price drop but also a 1.1–1.2% welfare decline annually between 2021 and 2024.
This finding supports the government’s apparent decision to prioritize construction and streamline the approval process. The newly established relocation public office is intended to directly address bottlenecks in housing supply, particularly in the Greater Seoul area, where demand has consistently outstripped available stock. The government’s move also follows a broader trend of recognizing the limitations of solely relying on demand-side interventions, as highlighted in a report by the Korea Economic Association, which noted the challenges facing South Korea’s real estate policy.
The government’s initial focus on blaming speculative demand from multi-property owners is now being supplemented by a more comprehensive strategy. While measures to curb speculation will likely continue, the emphasis is shifting towards creating a more sustainable and balanced housing market through increased supply. This represents a significant policy adjustment, acknowledging that addressing the housing crisis requires a multifaceted approach.
In January 2026, South Korea announced plans to fast-track housing supply in Seoul, broadening its response to a yearlong rally in prices. This move, coupled with the September 2025 announcement of the 1.35 million new homes plan, demonstrates a sustained commitment to addressing the housing shortage. The government is also considering tighter demand controls, such as lowering loan-to-value (LTV) ratios and empowering authorities to designate land transaction permit zones, but these measures are now viewed as complementary to, rather than substitutes for, increased supply.
The effectiveness of this new strategy remains to be seen, but the government’s commitment to a “speed war” on housing supply suggests a determined effort to tackle the nation’s persistent housing woes. The success of this initiative will likely depend on the government’s ability to overcome bureaucratic hurdles, secure land for development, and incentivize construction companies to accelerate building activity. The coming months will be crucial in determining whether this shift in policy can deliver tangible results and bring greater stability to South Korea’s housing market.
