[Viewpoint] End the witch hunt in Gangnam

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[Viewpoint] End the witch hunt in Gangnam

What is the first image that comes to mind when people think of Gangnam, the area south of the Han River in Seoul?

Thoughts will vary, but most people probably would conjure up images of a wealthy neighborhood, an area privileged with good schools and high priced housing. In fact, there’s an expression that sums up the overall image people have about people who live in this plush part of town: Gang-bu-ja, short for “rich people living in Gangnam.”

The term Gang-bu-ja has a negative connotation, one that paints that nickname for a certain class of people owning expensive real estate in Gangnam a disapproving color. (I apologize to Gang Bu-ja, a television talent, for using her name. I hope she will forgive me because this is a term that is already widely used.)

First of all, that these people have real estate in Gangnam is enough to arouse feelings of hostility and, simultaneously, jealousy in people who do not live there. The feeling that Gangnam people have made a fortune simply by the fact of living in that area is strongly embedded in the Gang-bu-ja term.

Another implication is that these people not only made money easily - they made it by dabbling in an explosive housing market with the primary motive of reaping quick profits.

Jealousy comes with the thought that people living in Gangnam, who are already rich enough to buy a home there, are now making even more money in real estate speculation.

This negative image of Gangnam was created by the administration of former President Roh Moo-hyun.

It brought the Gangnam area into the spotlight by making it a symbol for the unfair bounty of benefits that the privileged few enjoy. The evidence the administration provided was the skyrocketing housing market.

Several factors combined to raise Gangnam home prices, but the main reason was a lack of supply and a huge demand. And the government at the time concluded that the bubble in the Gangnam housing market would not spread to other parts of the country. If the prices of Gangnam homes had been left alone back then, it is highly possible that they would have eventually fallen on their own.

But even if the prices of Gangnam homes had risen further, of what relevance was it to the rest of the nation? Most Koreans would not have cared if property prices there went up or down, unless they lived in that area.

I have never heard of Americans getting jealous over rising home prices in Manhattan or Bevelery Hills, nor have I heard of plans for the U.S. government to investigate real estate speculation in those areas.

Suddenly, however, the Roh Moo-hyun government started to fight speculative investment in Gangnam. It started when Roh pinpointed Gangnam as the area where the privileged few clustered.

In short order, Gangnam was labeled as a hotbed of speculative investment by the unscrupulous. Gangnam was the perfect target for a Roh Moo-hyun-style witch hunt and for dividing the people.

Since then, various kinds of regulations and taxes targeted at Gangnam have been implemented. Consequently, the real estate market, not only in Gangnam but also nationwide, has been affected by similar levies and charges. This led to the paralysis of the real estate market throughout the country, and when it overlapped with the financial crisis, several construction companies went bankrupt.

The Lee Myung-bak administration has pulled out the nails hammered in by the Roh Moo-hyun administration one by one, saying it would revive the construction sector and normalize the real estate market. It has lowered the rate for the comprehensive real estate tax, abolished the cap on apartment sale prices and eased limits on resales, too.

However, there has been one lingering problem: the Gangnam area. The government and the Grand National Party deferred the plan to remove three districts in Gangnam from the list of real estate speculation areas. Even the promise to abolish the real estate transfer tax for families with multiple homes is drifting. The opposition parties claim it amounts to a “tax reduction for the rich.”

“The focus is on three districts in Gangnam,” Choi Kyung-hwan, chief policy coordinator of the Grand National Party, said,

“If a heavy transfer tax is imposed, we can prevent real estate speculation.”

He considers as fact that Gangnam is the epicenter of real estate speculation, but he is wrong. In the end, the National Assembly tax committee temporarily lifted the heavy transfer tax on families owning multiple homes.

But there was an awkward compromise: Three districts in the Gangnam area are excluded from the tax relief.

Essentially, the real estate policy of the participatory government under Roh Moo-hyun has been proven a failure. The true intention behind Roh’s Gangnam-bashing has been exposed, too.

So, why does government policy change with the rise and fall of Gangnam home prices? How long should we let Roh Moo-hyun’s spells rule us?

It is about time the whole country stopped obsessing about the prices of property in Gangnam.

The writer is an editorial writer of the JoongAng Ilbo.

Kim Jong-soo
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