[EDITORIALS]Cool the real estate market

The government has restricted land sales in nearly 70 percent of the Seoul Metropolitan Area, following steep real estate price rises. The land speculation boom has already taken place; we hope that it is "better late than never."

The heated land valuations were foreseen as cash from soaring apartment prices put pressure on land prices. According to the Ministry of Construction and Transportation, Seoul land prices rose 3.3 percent in the third quarter of this year, hitting their highest point in 11 years. Gangnam district showed the highest increase, 8.6 percent. An average rise this high means that some districts have experienced a doubling or even tripling of land prices. This can be observed in some price hikes of around 50 percent within a week of the development announcement for the New Town District of Seoul.

Recently, friction between the central and local governments regarding local development plans has intensified. Policies against land speculation in new town districts such as Jeongneung, Gireum, Sangwangsimni, and Eunpyeong should have been presented in advance. But authorities only hastened the issuing of land transaction authorizations. There is no way this can be considered sound policy; the casualties from such discord between the national and local governments will be the citizens.

The foreign exchange crisis has dealt a blow to society overall, but the fall in real estate prices it caused offered an opportunity to deal with the high-price low-efficiency structure. Yet, in the third quarter of this year national land prices were found to be 96.9 percent of those at the end of 1996, right back at the level before the foreign exchange crisis.

The excessive government priming of real estate businesses has only ended on a bad note, with a great opportunity to stabilize the overheated situation lost.

It is still too early to heave a sigh of relief at what is certainly just a momentary ceasing of apartment price increases. Before it is too late, we need consistency in policy in order to prevent an economic crisis caused by real estate bubbles.