Regulations on selling rebuilt apartments have been scrapped, while measures have also been abolished that had kept builders from selling apartments until they were at least 80 percent completed. Government approval procedures, including those on safety levels, have been simplified so that the process now takes just one and a half years from the previous three years. Apartment owners in the metropolitan area will be prohibited from reselling their homes until between one to seven years after their purchase, compared to the five to 10 year period before.

People owning two homes each valued at less than W300 million (US$1=W1,055) according to government-set appraisal prices, and living in a provincial city, will no longer have to pay capital gains tax if they sell one of their homes. People living in Seoul who own one home will now be able to buy another outside of the capital and let or lease it out, since the criteria authorizing lessors have been eased from a person owning at least five homes to at least one. The real estate market stimulus measures also include using W2 trillion in surplus funds by the Korea National Housing Corporation and Korea Housing Guarantee Co. to purchase unsold apartments in provincial regions for 70 to 75 percent of their sale values.

But it will be difficult for the latest government measures to revive the stagnant real estate market and turn the slumped construction industry around. That’s because the government did not change the biggest dampers on the real estate market, which are regulations on mortgage loans and the property holding tax. A lot of dishes have been placed on the table, but none are tempting.

The government has rolled out bolder stimulus measures after a number of steps announced earlier this year to get people to buy unsold apartments failed to have an effect. Around next weekend, the government is apparently going to announce measures aimed at lowering taxes involving real estate sales. It sounds like the government is looking into ways to further deregulate limitations that had been placed on the rebuilding of old apartments.

As long as measures miss the mark, the government will not be able to stimulate the stagnant real estate market. People who put their homes up for sale, buoyed by expectations of additional government measures, may end up taking their homes off the market. People who had planned to buy homes may end up waiting, causing the real estate market to grow more stagnant.

There is also controversy over the validity of building more satellite cities near the capital. The government says it is necessary since apartment construction has dropped 30 percent so far this year, compared to the same period in 2007, raising worries of a housing shortage over the mid-to-long term. The government has shifted its stance in just three months, after it said in May that it would seek to supply new homes by developing areas in Seoul rather than building new towns. Already, 10 satellite cities are being simultaneously built around Seoul right now. Additional satellite cities could lead to problems including traffic congestion, while worsening the situation for builders who are sitting on close to 130,000 unsold homes across the country. It is questionable just how precisely the government has forecast future demand for homes before making its decision to change its policy.

By appearing to implement one homoeopathic method after another to deal with the real estate situation, the government is hurting its credibility. We need a firm will to implement measures based on solid principles.