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Lee Seung-heon, a leading candidate to head the Bank of Korea, has expressed support for higher property taxes as a measure to control rising home prices and their potential inflationary impact. While he sees no need for immediate interest rate hikes, he emphasizes stronger housing market curbs to protect middle-class affordability. South Korea's central bank has maintained a neutral policy stance following multiple rate cuts, while the won and government bond yields reflect cautious market expectations. Lee's stance aligns with the government's push to discourage multiple home ownership.
Lee Seung-heon, among the top candidates to become the next governor of the Bank of Korea, has indicated that increasing property ownership taxes could help curb surging home prices, which risk reigniting inflation. However, he considers a shift toward tighter monetary policy at this stage to be premature. Advertisement
Lee, who previously served as senior deputy governor at the central bank, is seen as a likely successor to Rhee Chang-yong, whose term ends in April. In a recent interview, he noted that while housing prices are climbing, immediate interest rate hikes are not necessary. He highlighted that without raising the cost of homeownership, such as through higher property taxes, stabilizing the market would remain difficult.
He also pointed out that the broader monetary policy should remain steady, as economic growth is still modest. Referring to recent increases in three-year government bond yields, which reached a 19-month high, Lee suggested that while current market trends may be heading in the right direction, rapid adjustments could be premature.
South Korea's central bank has maintained a neutral stance after four rate cuts since late 2024. Policymakers have been balancing a weakening won against rising apartment prices in Seoul, aiming to maintain financial stability. The benchmark interest rate has remained at 2.50% for several meetings, while market expectations for additional easing have been gradually scaled back.
Strong semiconductor exports have helped the country's economy weather external pressures, including higher U.S. tariffs, as demand for AI-driven memory chips has boosted corporate earnings and domestic investment.
During his time at the central bank, Lee handled currency policies and engaged with international counterparts, including the U.S. Federal Reserve and the IMF. He could face immediate challenges relating to the rising cost of homeownership, a key domestic concern. His support for higher property taxes aligns with President Lee Jae Myung's recent calls for owners of multiple homes to consider selling before real estate taxes increase.
Despite high stamp duties and capital gains taxes on property sales exceeding 60%, South Korea's property ownership taxes remain comparatively low. On the Korean won, currently around 1,465 per USD, Lee described the currency as trading within a natural range, suggesting that temporary breaches above 1,500 per USD would not be sustainable.
Source Reuters
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