[EDITORIALS]Confusing real estate policyThe government and governing Uri Party are making a lot of noise about a number of real estate measures that have not been firmed up yet. The government is supposed to announced a new real estate policy package next month. Regardless of the viability of the measures, they come up with variety of ideas: Some say the government will build a new mini residential town comparable to Gangnam, or will use public land as sites for new housing construction.
Others say the government will lower the standard of comprehensive real estate tax assessment to 600 million won ($584.339) and let people pay for the cost of infrastructure. As for reconstruction projects, abolition of the government’s mandate to build certain portion of smaller apartment units was proposed, only to be turned down later.
Watching the government and the governing party announce a myriad of undecided measures, it led us to wonder if the government had decided to establish new real estate policies by floating trial balloons in the media to test public sentiment. The fundamental problem of the policies that have been announced so far is that the two quite different objectives -- stabilizing real estate prices and siphoning off windfall profits from speculation -- are at odds. The stabilization of real estate prices can be achieved when the basic market principle of increasing supply when demand rises is faithfully observed. Returning profits made off real estate speculation to the public, which is based on more political and philosophical ideas, requires the deliberate process of persuading the public and reflecting their opinions.
Housing prices are showing signs of stabilizing, perhaps thanks to the new plans. But many voice their concerns as to how long this situation can continue. Housing construction nationwide was up 24.7 percent during the first half of this year, while that in Seoul declined 12.5 percent, according to the Construction Ministry.
Considering the fact that Gangnam has led the housing price increases, the decline of housing construction in the capital area is an ominous sign. That is why we cannot help worrying that the government will never be able to take control of real estate prices if it keeps shifting between capturing speculative profits for the public and curbing the demand.
What is needed are more solid policies.