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The government and the Uri Party announced that at a Blue House real estate policy debate they would revise the foundations of the system for razing and rebuilding apartment blocks.
Rumors have been heard that the government would adopt a system where development charges would be imposed on the residents of the reconstructed area. Other rumors say the government will apply more detailed safety standards and require a longer lifespan for old buildings before reconstruction. There has even been talk of removing from local governments the authority to approve redevelopment projects. It seems that the effectiveness of the strict real estate policy launched on Aug. 31 has evaporated, although that policy was designed to be harder to change than the constitution.
The government, on numerous occasions, has assured us that real-estate speculation has ended. It said it was confident that rising apartment prices could be held down by suppressing the ownership and trading of houses. But the market did not move as the government intended.
House prices continued to go up because apartments for sale have disappeared because of heavy taxes and many new regulations, while demand for housing has stayed steady.
The new development charge implies a return of profits from reconstruction projects. It has the potential to infringe on private property rights. We have no intention of blaming the government for its strict measures, but the administration should remember the difference between willpower and stubbornness.
Real estate policy turned to rags long ago because the government stubbornly resisted the market. Although taxation and regulations were persistently strengthened, Seoul lost every battle against speculation.
The government needs to look at its failures. The biggest problem is the basic idea of standing against the market. Good policy would boldly remove regulations in places where the demand for housing is high.
The market can be stabilized only with sufficient supply through reconstruction and new towns by forecasting medium- and long-term housing demand. That would stop speculation.
It is awkward for the president to lead every real estate plan, and then blame the media or political opposition for its failure. Calm working-level attention and responses would be more effective. Housing price stability will never happen if political propaganda rampages.
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