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[EDITORIALS]A war on the market

The government’s policy on the real estate market continues to be confusing. At a Blue House policy consultation meeting on Friday, the government had announced plans to “re-examine the existing real estate policies from scratch.” But then it revoked the expression “from scratch” and said, “Re-examination doesn’t mean withdrawing the present policy.”
The government doesn’t intend to admit its past policy failures. But it also doesn’t intend to say that its policy has been a success. At the meeting, one participant even expressed the concern that “due to a lack of effective means to implement the real estate policy, the government is on the verge of losing credibility.”
If the policy is neither a failure nor a success, what on earth is it? The government says, “The direction of the policy is right, but it doesn’t work because the means of implementation are weak.” President Roh Moo-hyun said, “We know the answers to the problem, but they are not implemented because of vested interests and incorrect practices.” Han Duck-soo, deputy prime minister for the economy, claimed, “[The recent real estate price surge] is not a failure of government policy, but a failure of the market.”
Government policy, based on this perception, is to tighten regulation and curb demand. Disregarding experts’ recommendation that supply be increased, the government is determined not only to maintain current policy but push it further. The National Tax Service has announced a plan to greatly expand tax investigations. The supply of large and medium-sized housing units in the Pangyo new town had been expected to increase, but instead the government has decided to increase the supply of small rental units. It is said that the government is also considering replacing the private developer with a state agency. The government has not only abandoned market-friendly policy, but intends to oppose market principles. This administration’s real estate policy has proven to be a war on the market, not on speculation.
This is simple obstinacy ―a test of the stubbornness of the government against the strength of the market. We wonder what the government will say when it loses. The trials and errors of the past two and a half years have shown the limits of a real estate policy based on regulation and control.