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[EDITORIALS]Hasty housing policy

Published: 05 Jan. 2003, 22:28

The government's housing stabilization measures announced on Monday do not seem to us to be a well-considered damper on our overheated real estate market. They seem slipshod and are far from being a satisfactory solution to the problem. In Gangnam, a southern district of Seoul, the price of apartments has risen several tens of millions of won in just a few weeks. The prices of old apartments in areas which will be redeveloped have risen 40 percent in a year. This speculation seems poised to grow and spread. If it does, it will not only be a threat to the economy but a social problem that widens the gaps among our citizens.

The government's measures － more scrutiny of transactions in "hot" neighborhoods and freeing more land for housing － may dampen the speculation if they are carried out well. But they are aimed at punishing speculators, not solving the underlying problem.

Our real estate market is unstable because policies have focused on helping construction companies, not providing more housing, and criticism of those policies has made no impact. Apartments can be bought and sold before they are completed and before the buyer legally register his ownership. That increases speculative demand, but puts more money in construction firm coffers. Deregulating apartment prices, intended to let the market reflect differences in land prices, has only driven speculation. Newer and better-fitted apartments forced prices up, pulling up prices of older units as well. Reconstruction projects, an effort to increase the quality of our housing, has driven up the price of old apartments due to be razed as speculators bid on them. It is little wonder that our real estate market is a bazaar.

Because of low interest rates and the upcoming elections, real estate speculation, not our economy, is booming. If speculation infects other sectors, the damage will be great.

Using construction to stimulate the economy should be stopped. Tax audits, the all-purpose government response to problems, only damage people's confidence in the government. In districts where speculation runs rampant, Seoul should ban or limit the sale of apartments before they are completed or ownership is registered, and press construction companies to disclose how they set prices of top-end apartments.

In Gangnam, a different approach is needed. Apartment prices are rising there because of our fixation on sending our children to the best universities possible by enrolling them in the best high schools, most of which are concentrated in Gangnam. We need better educational infrastructure in other districts, not a rearrangement of school districts or the relocation of preparatory schools in Gangnam.

We should not forget that the core of a housing policy should aim at a stable supply of housing by continuous development and renewal of our housing areas.