[EDITORIALS]Quick fixes won’t help marketThe government has lifted regulations aimed at suppressing real estate speculation from certain areas, including eight areas in the capital city and its vicinity.
The move was made in hopes of thawing the frozen real estate market. However, most experts, and the market itself, have yet to react warmly to this development. This faint wisp of heat, it seems, will not be enough to crack the ice. The flow of the market is like the circulation of blood in the body: It must make a complete circuit. Opening certain places while keeping others closed won’t help the flow.
It seems unlikely that the new real estate tax system will be implemented within the year and there are just too many uncertainties surrounding the real estate market for the time being. The real estate market is not going to budge while uncertainties persist.
The reason that the real estate market has frozen like this is because of the government’s constant “exigency measures” to keep home prices static. While the measures have succeeded in stabilizing the house prices, real estate transactions have all but dried up, and many have experienced difficulties selling or buying houses. Moreover, many rental apartments for low-income families, operated by small construction businesses, have gone bankrupt and the public housing situation is being threatened by such abnormalities as a flood of tenement buildings on the auction market. In short, government policies that were supposed to stabilize the housing situation for the public have actually made things worse.
All these problems arose from the fact that the government produced symptomatic solutions aimed only at suppressing certain speculative forces in the market.
The more fundamental reason that housing prices rose from 2002 is that supply has shrunk considerably since the financial crisis of 1997. Looking ahead, the fact that this year’s supply has shrunk to half of last year’s could mean housing prices could skyrocket in two or three years.
The government should refrain from a string of ad hoc policies and present a new general framework for housing policies. It is not too late to abandon makeshift measures to regulate housing prices through regulation, and adopt a market-friendly real estate policy more receptive to the flow of supply and demand. Establishing a long-term policy is the key to getting the real estate market back on track.