Ruling Camp in Total Disarray over Real Estate Policy

      May 12, 2021 13:49

      President Moon Jae-in in a speech earlier this week marking the fourth anniversary of his inauguration made an unusual admission. "As far as the real estate market situation goes, the government has no excuses," he said. For years he had been claiming he was "confident" of taming soaring apartment prices, but now, with just a year left in office he "received a wake-up call from the public" in the ruling party's humiliating defeat in the mayoral by-elections last month.

      But has he really seen sense? Does he really know what went wrong? No. "Our real estate policy is based on prohibiting speculation, protecting end users and stabilization through housing supply," he said. "This policy direction will not change." And even on those terms he failed to deliver. His government blocked the construction of new apartments to boost housing supply and made it nearly impossible to secure housing loans for even homes below the median price by treating half the population of Korea like greedy speculators. The regulations only led to apartment prices going through the roof and people scrambled to buy before things got even worse. The government's belated attempts to boost housing supply are limited to a few new public housing projects by the Korea Land and Housing Corporation, the same public agency where officials were nabbed speculating on real estate. Moon also made no mention of changing policies aimed at protecting tenants and other unrealistic measures that only resulted in soaring rents.

      Following its humiliating defeat in the by-elections, the ruling Minjoo Party promised to overhaul the government's real estate policies. New MP leader Song Young-gil proposed easing housing loan caps for first-time buyers and comprehensive real estate taxes, which have been raised sharply in a failed bid to get multiple home owners to sell their apartments. The party also appointed Kim Jin-pyo, an opponent of the current real-estate policies, as the head of a special committee on the matter. But any shift in policy is growing less likely due to fierce opposition from hardline Moon loyalists within its ranks.

      Presidential hopefuls aligned with the ruling party have been arguing over who is to blame. Gyeonggi Province Governor Lee Jae-myung said, "Until now, the president has stressed that he would make it impossible for people to get rich from real estate speculation and stabilize the market, but I wonder if the officials in charge of executing these policies did their work properly." He was taking aim at former prime ministers Lee Nak-yon and Chung Sye-kyun, his putative rivals in the race for president, but stopped short of pointing the finger at Moon himself.

      Chung fired back at the governor by saying, "Provincial governments probably could have done a lot more." But then he added, "We need to wait until apartment prices stabilize before we make financial regulations and taxes more realistic." Instead of proposing realistic policies, Lee Nak-yon then called for a separate agency to focus on solving the housing problem. Did the housing mess plaguing the country happen because of a lack of a government agency handling it? This is the most confusing cacophony in contemporary politics.

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