January 12, 2021 13:31
President Moon Jae-in apologized during his New Year's address on Monday for his government's failure to tame soaring real estate prices. "It is truly regrettable that housing-related hardships have immensely disappointed the people," Moon said. It was the first time the president apologized for the government's unrelenting and disastrous regulation of the real estate market. The Moon administration rolled out no fewer than 24 separate real estate regulation packages since 2017 but was unable to cap breakneck surges in apartment prices.
In November 2019, Moon said he was "confident" about taming soaring apartment prices and solving the shortage of homes. At the time apartment prices in the capital had soared by tens of millions of won in the span of just a month, prompting many jittery young couples to borrow heavily to purchase homes (US$1=W1,097). Even until August of last year, Moon was "confident" that he had cracked the problem and their effects were "becoming gradually apparent" and apartment prices "stabilizing."
About a year ago, Moon also said he managed to stabilize apartment rents and joense or Korean-style deposit leases that he described as "insane." But the laws boosting tenants' rights that ruling lawmakers bulldozed through parliament ended up pushing rents to the highest in five years, and many landlords kicked their tenants out and moved in themselves.
Since Moon took office in 2017, apartment prices in Seoul have surged 58 percent to reach record levels. In central Seoul they are the third-highest in the world. This is the direct result of real estate policies that ignored market principles and simply blamed owners of multiple homes. The government's fatal misdiagnosis ended up causing apartment prices to surge across the country as people scrambled to buy homes before prices rose even higher. After four years of policy blunders, Moon now says he is sorry and wants to "focus on boosting supply." Even if he does go to work doing that now, the effects will become apparent in four or five years, by which he is long gone. Saying sorry is not enough.
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