Failed real estate policy
Government must change course toward market-friendly measures
Despite the government's 21st set of real estate measures unveiled June 17, apartment prices in Seoul and the surrounding metropolitan area are rising yet again. Upward momentum has been conspicuous in some regulated areas as well as such unregulated areas as Gimpo and Paju in Gyeonggi Province over the past week due largely to the so-called balloon effect caused by the June 17 package that was mostly focused on stamping out speculation.
The government appears to be adjusting for the next set of measures, dismissing the criticism that the real estate policies it has implemented over the past three years were a total failure. Answering a question from an independent lawmaker at the National Assembly Tuesday, Minister of Land, Infrastructure and Transport Kim Hyun-mee said it was too early to evaluate her policies because some measures have yet to be implemented.
More recently, however, even allies of the Moon Jae-in administration are joining the ranks of critics lambasting its real estate policy.
In a press conference Monday, the People's Solidarity for Participatory Democracy, a progressive civic group, urged the government to review the policy, stating, "People's resentment and anxiety over soaring home prices are boiling over." In a Facebook message Sunday, Prof. Cho Ki-suk of Ehwa Womans University who previously worked with President Moon at Cheong Wa Dae during the Roh Moo-hyun administration, ascribed the failure of the government's real estate policy to a lack of expertise.
What's even more embarrassing is that many high-ranking government officials, including Cheong Wa Dae staffers, still own more than one house despite Moon's repeated request that they sell any properties they are not living in.
The surge in housing prices at a time when the overall economy is anemic amid the COVID-19 pandemic is perilous enough. More worrisome is that liquidity is overflowing owing to record-low interest rates and massive fiscal expansion through economic stimuli. The government should acknowledge its policy failure and change course toward market-friendly real estate measures, including supply-side solutions.
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