Hands-off housing is best

The Grand National Party and some Uri lawmakers objected on Wednesday to parts of the bill revising the nation’s housing law, following the administration’s new real estate policy, announced on Feb. 11.
The lawmakers objected to making public the costs private companies incur when building apartments and to setting a ceiling on the cost of finished apartments. They said excessively regulating the private apartment market will shrink supply.
The decision was meaningful because the lawmakers carefully considered long-term supply and demand, rather than public opinion, which wants to know how much it costs to build apartments.
The intended changes are overlapping regulations, and will largely reduce the number of private builders in the long term.
It is obvious that the measures will go against the stabilization of housing prices. If a private company is required to lay bare its accounting books, in addition to being regulated by a sales price ceiling, it will not want to do business in the housing market.
The administration said it will make up for the reduction in supply from the private sector, but that is an argument that ignores the reality of the housing market.
Taking into account the increasing deficit in state finances, the administration’s claim that it will build public rental housing to make up for the housing shortage sounds reckless. Even the Korea National Housing Corporation declared that building 1 million units of public housing by 2012 is impossible.
Regulations on private builders will likely reduce the supply of high-quality housing, which is in high demand. For the past few years, the increase in housing price was prompted by the demand for high-quality homes in Gangnam. That means the reduction of high-quality housing will likely bring about another housing price surge in a few years.
As the Government Information Agency has announced, the home supply rate is below 100 percent, and the rate is even lower in the capital region. Without a consistent increase in supply, the housing market may become unstable again at any time.
The National Assembly should consider revising the housing law to allow private builders to build up their housing supplies under open-market principles, while the government only oversees the housing policies for the lower-income bracket.
That is the right path to heightening the nation