[EDITORIALS]To end home speculationThe government is scrambling belatedly to find ways to curb soaring real estate prices. The matter is urgent; the property market is reaching a point where more money chasing fewer goods could threaten the economy.
Most of the current problems stem from government policy failures. Seoul has announced a series of measures to cool the overheated housing market; every time it did so, it promised that the real estate bubble would disappear soon. But the government's policies all backfired, fueling a speculative housing investment boom that has become nearly immune to government measures to curb it. The government either did not have a full grasp of the nature of the problem or tried to turn its face away from it.
A new package of measures that the government plans to announce soon reportedly calls for increasing taxes on home ownership, tighter rules for the exemption of capital gains tax and overhauling the current lottery-based apartment sales method. In order to stabilize the housing market, speculative attempts to buy homes must be blocked. Strengthening the sign-up system for the chance to buy a new apartment would be effective. Raising the apartment ownership tax would also be a good choice as a way fundamentally to curb real estate speculation.
But raising the home ownership tax would have quite a few side effects, and the government must be careful about taxpayer resistance to the plan. Everybody agrees that it is absurd for the government to tax passenger cars more than homes. But when Seoul attempted to raise the home ownership tax, it was blocked by angry taxpayers.
To curb real estate speculation, tax system revisions and a stable supply of land and houses to meet demand are needed. An interest rate hike should be used if necessary.
But if the government announces major development projects that have not been coordinated among government ministries, as it did recently, the plans will only fan property speculation rather than easing it. To win a war against speculation, the government should clarify its policy goals and implement them coherently.