Pressures Real Estate, Lifts Stocks, Calms Exchange Rate...Signals Sent by President Lee

At First Anniversary Press Conference, President Lee Shares Economic Views

Real Estate: "Will streamline tax, finance, regulation, and supply all at once... Will lower expected returns"

KOSPI at 8,000: "A process of returning to normal from

At the press conference marking the first anniversary of his inauguration, President Lee Jae-myung delivered distinct signals to the real estate, stock, and foreign exchange markets. He issued a warning to the real estate market, stating his intention to lower speculative expected returns; he expressed confidence that the commitment to normalizing the capital market would continue in the stock market; and he assessed the current abnormal trend of the exchange rate, which is in the mid-1,500 won range, as a temporary phenomenon.

President Lee’s message stemmed from the recognition that these markets do not move independently. He believes that only by redirecting capital that is excessively tied up in real estate toward productive investments can the undervaluation of the stock market be resolved, and that the short-term volatility in exchange rates seen during the process of normalizing the stock market remains within manageable limits. This indicates that the focus of economic management in his second year in office will be on “ending the era of real estate speculation,” “normalizing the capital market,” and “managing external uncertainties.”

Real Estate: “Expected Returns Will Be Lowered”... Announces Plan to Revise Holding Tax

President Lee Jae-myung is speaking at a press conference marking the first anniversary of his inauguration, held at the Blue House's main reception hall on June 8, 2026. Photo by Yonhap News Agency

President Lee defined real estate issues as a structural distortion of the Korean economy. He stated, “Among the problems that are eating away at South Korea’s prospects for future development, real estate speculation is the most serious,” adding, “Escaping the era of real estate speculation is the only way for this country to survive.” He explained that rising housing prices have undermined work motivation and locked up national assets and capital in real estate, preventing them from flowing into productive sectors.

The policy direction is to pursue both an expansion of supply and a curbing of speculative demand. President Lee said, “Whether it’s new construction or redevelopment and reconstruction, we will speed up the process to increase supply.” However, he drew a line at simply increasing supply through large-scale new town developments in the Seoul metropolitan area. He emphasized, “Building new towns by destroying greenbelt areas may provide a temporary solution, but it would devastate the provinces.” Instead, he placed greater weight on increasing supply within existing cities, through redevelopment, reconstruction, and development of unused plots.

He also made it clear that he intends to increase the burden on owners of multiple homes and those holding properties for speculative purposes. President Lee said, “Let’s increase the burden on non-residential homes held for speculation or investment so that they come onto the market,” and, “Let’s prevent real estate speculation using other people’s money.” He continued, “There is no country with as many real estate-backed loans as South Korea,” and mentioned both household debt and risks to financial institutions.

In addition, he announced a revision of the holding tax, an issue he had previously refrained from addressing. President Lee remarked, “Our country’s holding tax is generally low,” and added, “We need to protect homes held for residential purposes, but if they have become luxury items, it is appropriate that they bear a holding burden comparable to that imposed by advanced Western countries.” He went on to say, “We are preparing to address tax, finance, regulation, and supply all at once,” noting, “It seems that the tax issue should be addressed all together around July, when we work on next year’s budget.”

Regarding the jeonse (lump-sum lease) market, he described it as being in the midst of normalization. President Lee called jeonse a “unique private financial system that exists only in South Korea” and said, “The increase in jeonse loans has been the main driver of rising housing prices.” While he acknowledged that there has been a decrease in jeonse supply since the end of the capital gains tax deferral for multi-homeowners, he explained that, to a significant extent, this is the result of non-homeowners purchasing homes for actual residence, and described it as “part of the normalization process.”

Stock Market: “Still Slightly Undervalued”

President Lee Jae-myung is speaking at the 1st anniversary press conference held at the Blue House State Guesthouse on June 8, 2026. Photo by Yonhap News

President Lee sent a relatively positive signal to the stock market. Regarding the KOSPI surpassing 8,000 points, he described it as “a process of normalizing what was abnormal.” He said, “I expected the stock index to reach 5,000 after another two to three years, but it happened in just six months. Once I was convinced that this was not a new situation but rather a normalization, there was no reason to wait any longer.”

He cited geopolitical instability, uncertainty in industrial policy, and entrenched capital market practices such as stock price manipulation and physical spin-offs as reasons for the undervaluation of the Korean stock market. President Lee stated, “If we mitigate geopolitical instability on the Korean Peninsula, present clear national industrial and economic policies, prevent market manipulation, and resolve abnormalities such as dual listings and physical spin-offs, I believe the index can surpass 5,000.” He assessed the semiconductor boom as an additional engine of growth.

He also observed that a correction is inevitable given the short-term surge in the stock market, which at one point approached the 9,000 mark. President Lee said, “Stock prices do not move in a straight line; there will always be swings. People need to realize gains, adjust their portfolios, and those who are anxious should take a break.” Nevertheless, he added, “I still think the market is slightly undervalued.” Regarding the benefits of rising stock prices, he noted, “It’s not just those with large-cap or semiconductor stocks who benefit; all citizens benefit through the rise in the valuation of the National Pension Fund.”

Exchange Rate: “Abnormal Trend, Likely Temporary”

President Lee Jae-myung is answering reporters' questions at a press conference on the first anniversary of his inauguration held at the Blue House Guesthouse on June 8, 2026. Photo by Yonhap News Agency

Regarding the exchange rate, President Lee did not view the current level as normal. On the won-dollar exchange rate rising to the mid-1,500 won range, he said, “It’s true that the rate is high, but I believe it is temporary. I don’t think this is a normal situation right now.” He explained that while an increase in the current account surplus is a factor supporting the won, instability in the Middle East and portfolio rebalancing by foreign investors following the sharp stock market surge are currently putting upward pressure on the exchange rate.

He pointed out the unusual situation in which a surging stock market has become a factor in the exchange rate’s rise. President Lee said, “Ordinarily, when the stock market rises, the exchange rate moves in the opposite direction. But since the market has risen so quickly and by so much, the proportion of Korean assets in foreign funds has become too large.” He continued, “To rebalance, they are selling and converting won to dollars, which has created additional demand.” He added, “This cannot continue indefinitely. Sooner or later, the Korean stock market will find its balance.”

This content was produced with the assistance of AI translation services.