Housing Supply Plans Fail to Calm Real Estate Market
The government's plans to build over 130,000 new affordable homes in the Seoul metropolitan area have so far failed to calm real-estate market jitters.
In other drastic measures, Finance Minister Hong Nam-ki on Wednesday warned that people who buy apartments worth more than W900 million will face probes into the sources of their money (US$1=W1,189).
But according to KB Kookmin Bank, the median apartment price in Seoul already stood at W927.87 million as of July, which means half of all apartment owners in the capital who sell their homes from now on will face an investigation.
Market analysts said it was bizarre for the finance minister to threaten homeowners just after the announcement of a major housing supply plan.
The vice minister of Land, Infrastructure and Transport said on a radio program, "The government's aim is not maintaining current housing prices but bringing them down." He added that the government still believes that there is no housing shortage, and the new plans were prepared to ensure "ample supply after 2023."
Critics have complained that the government's 22 measures so far to tame real estate prices have in fact increased them. One bank staffer in charge of housing loans said, "The problem is the government's overblown confidence that it can control property values by intervening in the market." The staffer added that the latest housing supply plans "were based on an inaccurate diagnosis that real estate speculators are driving up apartment prices."
Others took aim at the ministry's reluctance to discuss its plans with local governments first. One Seoul city government staffer said, "We have a rule to supply as many homes as possible in the capital without political considerations. But the government has abruptly announced unrealistic public housing projects" whereas city officials want the private sector to lead such developments to revitalize the depressed market.
Due to the new regulations, several renovation projects for old apartment complexes in Seoul and surrounding areas have been either halted or delayed.