Choi pushes lawmakers on housing

Finance Minister Choi Kyung-hwan urged lawmakers to pass the government’s bills to boost the real estate market in order to sustain the current recovery.

At a ministerial meeting on economic affairs at the Seoul government complex on Wednesday, Choi said, “Early passage of the bills is necessary to help continue the trend of rising housing transactions.

“Owing to the government’s efforts, the total number of housing transactions stood at 109,000 in October, marking the largest volume in eight years,” Choi said. “Even though the housing market is in the process or normalizing, news reports are misleading consumers that the market is falling back into a recession [because of the pending bills]. Passage of the bills is needed in order to not mislead the people.”

The Park Geun-hye government’s economic team led by Choi, who is also the deputy prime minister for the economy, believes that consistent, reasonable increases in housing prices will encourage consumers to spend.

The government believes more transactions in the real estate market would give more business to related service industries, such as relocation agencies. Revenues would go up as more acquisition taxes would be collected.

Analysts say that if the five bills aimed at supporting the property market are not passed soon by the National Assembly, the market will fall back into a recession.

The five acts awaiting approval of the revisions are: the Income Tax Act, the Restriction of Tax Reduction and Exemption Act, the Housing Act, the Restitution of Housing Reconstruction Gains Act and the National Housing and City Restoration Fund Act.

“If the bills are scrapped or if the government’s plans altered at the National Assembly, the market will be filled with growing uncertainties that might lead to another period of recession,” said Kim Dong-soo, an official at the Korea Housing Association.

Meanwhile, the delay in passing the bills is expected to trigger oversupply problems in the housing market, according to the Ministry of Land, Infrastructure and Transport.

The number of construction permits issued for new houses climbed significantly from a year earlier in October, marking the 10th consecutive month of year-on-year increases, the ministry said Wednesday.

The number of new home permits last month was 45,475, up 36.4 percent from the same month last year.

The total number of permits for new houses from January through October was 396,803, up 25.7 percent from the same period last year. The government is concerned about oversupply because the optimal number of new houses this year would be 374,300.

“While some consumers are postponing transactions because of the delayed bill passage, the increasing number of newly built houses can serve as a negative factor for housing prices to retreat overall, being a drag on the current recovery path,” said a ministry official.

BY SONG SU-HYUN [ssh@joongang.co.kr]