South Korea’s Land Minister Kim Hyun-mee on Tuesday refuted growing criticism over the government’s focus on raising taxes rather than dealing with housing supply shortage.

In its latest effort to curb the heated real estate market, the Moon Jae-in administration rolled out its 22nd set of policy actions dubbed the “July 10 measures” last week, which centers on increasing taxes for multiple-home owners.

But it was immediately hit with waves of criticisms from both market experts and property owners, claiming it is unlikely that heavier property taxes will prompt speculative buyers to sell off their surplus properties. The latest measures also apparently failed to send a positive signal to market watchers, who have been waiting for a more solid response regarding housing supply.

“Housing supply is not insufficient at the moment,” Kim said in an interview with local radio station TBS early Tuesday.

“More than 40,000 apartment residences have been available in Seoul annually and this year, there were 53,000, marking the largest since 2008,” she added.

Measures to bolster housing supply was largely absent in the July 10 measures, with the administration saying that they are in the process of “examining and checking” related moves, including utilizing empty retail or office properties in key areas.

Kim pointed out that the problem is not the number of properties, but the lack of a system to distribute them smoothly.

“The reason we have rolled out heavier property tax measures through the latest announcement is to allow the supply to flow toward actual single-property owners rather than multiple-home owners,” she explained.

On concerns that more multiple-home owners will simply pass down their properties to their children rather than selling them off, Kim said that she is “well aware of the possibility” and is currently seeking ways to make the option less profitable than offloading.

Kim also refuted suspicions that the government has announced the latest property measures merely to collect more taxes, saying that “there are other ways” to collect more taxes.

Korea’s housing market is aggravated by several factors, but a key stimulant is excessive demand for properties in Seoul and other adjacent or metropolitan areas coupled with supply shortage.

Earlier this month, President Moon officially summoned Kim to “increase additional supply,” despite announcements made in May by the Ministry of Land, Infrastructure and Transport to supply 70,000 new residential properties in Seoul and other key areas for the next three years.

“The government is currently freezing the supply and suppressing market demand,” Kwon Dae-joong, a real estate professor at Myongji University told The Korea Herald.

“Rather than levying heavier taxes on multiple-home owners it would be more effective to lower the capital gains tax, giving more room for owners to sell their properties,” he added.

Despite government efforts, the median price of Seoul apartments climbed 52 percent from 606 million won ($505,000) to 920 million won during the three years of the Moon administration as of May this year, a report by the Citizens’ Coalition for Economic Justice based on KB Kookmin Bank’s data showed last month.

By Jung Min-kyung (mkjung@heraldcorp.com)