[EDITORIALS]Empty real estate promisesThe construction and transportation minister, Choo Byung-jik, said Monday a new satellite city would be built, although it does not seem to be a well-prepared plan. The minister entered a press room out of the blue and began to speak.
Last week, at the National Assembly’s audit of his ministry, he assured the lawmakers that housing prices were stable and there was no danger of more inflation. But then suddenly a pressing need for more housing appears and the minister talks about a huge increase in supply. The number of housing units in the metropolitan Seoul area indeed falls far short of demand, suggesting that inflation in housing prices is far from under control.
On the Blue House Web site, there is a posting titled “Let’s have new thoughts on real estate.” The article says some media insist on increasing the supply of houses because they want to boost the real estate market and make money running advertisements for construction companies. The shortage of houses is a groundless worry, the article says, and the supply of houses is enough that within five years there will be an oversupply. The administration guaranteed that the supply was sufficient but as housing prices continue to go up, it hurriedly plans to build a new satellite city in order to increase the supply.
Mr. Choo advised that one should buy a house after housing prices drop following the completion of the new satellite city. But there are few people who would believe in the administration’s real estate measures because it changes its words so many times. At least, the administration should admit first that its real estate policies have discouraged construction and sales and has proved to be a failure.
A new satellite city is certainly not a bad idea, but it is not enough to stabilize the housing market. The administration should forget about its ideology and should make drastic changes in the current real estate policy, including cutting transfer taxes when a family owns only one house. It should re-examine from the roots its regulations on reconstruction of old apartment buildings.