The new president in South Korea is set to impact the South Korean property market in a positive way.
The South Korean National Election Commission has announced that Democratic Party candidate, Moon Jae-in, has been elected as South Korean’s new president. He has strong intentions of having a positive influence on the South Korean housing market, which is good news for the locals and of course, for visiting tourists to the country.
He has in the meantime expressed a strong willingness to discuss terms with North Korea in regard to the U.S. made THAAD missile system, which consequently resulted in high tensions with China. South Korea is fully aware that the U.S. is a fundamental partner for them, so by negotiating terms with North Korea, this could affect the relationship South Korea has with the U.S.
Moon plans to introduce new financial policies that can affect the South Korean economy with the rest of the world in an optimistic light. He wishes to stabilise the market and support economic recovery; however, the Bank of Korea’s base rate is likely to remain unchanged.
There is a need for a change in interest rates to address high levels of household debt and offer support for small loan finances, which are two elements Moon intends to deal with. The new administration plans to address it by implementing a stricter Debt Service Ratio over the current Debt to Income Ratio.
Moon’s administration is also expected to revoke corporate tax benefits and heighten the corporate tax rate to 25% to fund the pledge to increase social welfare expenditure. He also wishes to introduce a more transparent democratic management and to strengthen all operations to do with shareholders and politicians, but what does this mean for the South Korean property market?
An American commercial real estate company expects to see Moon’s administration to have a mixed influence on the domestic real estate market and the office sector is set to benefit the most.
He pledges to focus on the fourth industrial revolution and to kick-start a wave of startups to encourage more growth in the real estate market. He wishes to boost investment opportunities and to take advantage of tech-related projects as well as creating new office leasing demand.
With a reduction in tension with North Korea, this should aid attracting more foreign investors to the South Korean property market. Despite this strong outlook, the new administration is set to increase taxes on property holdings, which could increase the cost of investment (which is the only downfall in this respect).
Moon wishes to focus his new policies on managing the residential sector rather than the commercial market, which is another improvement in the South Korean housing market. He also outlines to implement restrictions on shopping malls operated by conglomerates, in a bid to protect small and private businesses, which could be detrimental to the retail sector.
With all this in mind, the new president of South Korea is certainly set to impact the property market in a very good way, which all round, means fantastic property news for the economy.
Written by Gemma Smith