[Op-Ed] Housing Redefined as Both Investment and Residence: Spotlight on Korea’s “New REITs Model”

The government’s ultra-stringent regulatory policies—raising the bar for mortgage loans and kicking away the housing ladder—will hurt end-users

We must fundamentally redefine how we think about securing housing and break the outdated “debt-centered” framework

New REITs can ease the household debt ratio, spread housing price fluctuation risk, and contribute to macroprudential soundness

Reorganizing the acquisition tax, comprehensive real estate holding tax, and capital gains tax, along with supplying high-quality new housing sites, is the top priority

The government has rolled out three rounds of ultra-stringent regulatory policies aimed at curbing speculative demand in the real estate market. By raising the threshold for mortgage loans, there are growing concerns that it is effectively kicking away the housing ladder and will end up harming genuine end-users, including the homeless and newly married couples.

To manage household debt, the government has implemented tighter stress DSR (Debt Service Ratio) rules and adjusted the LTV (Loan-to-Value) cap. At the same time, it has also pushed to expand supply through public housing site development, but this is fundamentally contradictory. A short-sighted approach of combining tighter regulation with increased supply can never resolve the structural problem of making people perceive housing as “debt to be repaid over an entire lifetime.”

These policies may achieve their primary goals of reducing household debt or immediately suppressing speculative demand, but they will also bring about greater confusion and distortion in the real estate market and suppress the public’s fundamental desire for “homeownership” and a “housing ladder.” In addition, most current supply measures follow the existing pre-sale model, which presumes large loans, thereby reinforcing the entrenched belief that “you have to go into debt to buy a home.”

To solve this chronic problem of housing insecurity, what is needed is an innovation in housing arrangements that completely overturns the existing approach. Beyond simply regulating loans, we must fundamentally redefine how we think about securing housing and dismantle the outdated “debt-centered” framework. This is precisely why we need to pay attention to the new model of housing ownership and investment proposed by Bank of Korea Governor Changyong Rhee: the “Korean-style New REIT.”

The Korean-style New REIT uses the financial structure of existing REITs to create a model in which people can simultaneously secure the right to live in a home and partial ownership by purchasing shares in a homeownership REIT. It operates in a “half-jeonse” format, in which the investment effectively serves as a deposit, and investors can maintain their status as non-homeowners while still enjoying part of any capital gains. Another major advantage is that real estate investment returns can be shared not only by a select few, but by ordinary investors as well.

This model can ease the household debt ratio, currently a major fault line in our economy, and contribute to macroprudential management by dispersing the risk of housing price fluctuations from financial institutions to a broad base of private investors. It would not only help resolve the economic instability caused by excessive household debt, but also serve as the first step toward structural innovation that enhances productivity across the economy.

For this innovative model to take root successfully in the market, bold tax support must come first. It is essential to proactively overhaul tax factors that constrain the activation of New REITs, including the acquisition tax, comprehensive real estate holding tax, and capital gains tax. In addition, the supply of high-quality new housing sites that can ensure business feasibility is also an indispensable prerequisite.

The Korean-style New REIT is a financial innovation aimed at eliminating the chronic housing problem in South Korea: economic instability. This shift in thinking—redefining housing not as “debt” but as an object of “investment and residence”—could be the very solution that frees our society from the “shackles of debt” that have weighed it down for decades. The time has now come for the government, from a long-term perspective, to move beyond unconditional regulation and ensure that this new and innovative model takes root.

Youngyun Jin, Intern Researcher, Center for Free Enterprise (CFE)

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Original title: [칼럼] 주택, 투자와 거주 대상으로 재정의--한국형 '뉴리츠 모델' 주목

Author: Young-yoon Jin

Date: 2026-02-04

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&idx=28588