New land minister vows real estate action soon
“Measures to normalize the real estate market are urgently needed,” he told reporters yesterday after attending his inauguration at the Sejong Government Complex in South Chungcheong. “We will be announcing a comprehensive package of real estate measures at the end of this month or early April.”
Suh, a former professor at Yonsei University, was nominated by President Park to lead the country’s land ministry last month. He was formally appointed on Monday along with 12 other ministers who went through National Assembly confirmation hearings.
In his speech, Suh pointed out that prolonged stagnation in the country’s real estate market is hurting the economy and threatening the livelihood of the people.
“We must come up with efficient measures, fast,” he said.
Suh’s remarks come amid growing concern over the real estate market and construction industry.
According to the land ministry, the price of homes in Korea dropped 0.26 percent on average in January compared to the previous month. It was the 10th straight month-on-month decline.
With prices dropping, Koreans have been reluctant to purchase houses fearing that prices will drop even more.
Instead, they have turned to living on jeonse as tenants by paying the house owner a lump-sum deposit. With the rise in jeonse demand, the cost of jeonse have surged.
“First of all, there must be a change in the paradigm of the country’s housing policy by expanding the number of rental homes, while at the same time providing universal residential welfare based on demand,” Suh said. “Rather than expanding the city to the outskirts [by building apartments, the government] should provide rental houses inside the city where there is more demand. We will promote detailed and diverse measures that meet actual housing demands of the people including university students and newlyweds.”
The minister said the comprehensive measures will include Park’s pledge to introduce a jeonse system that does not require high key money.
He also touched upon the issue of housing-related loan regulations, such as debt-to-income (DTI) and loan-to-value (LTV) ratios to stimulate the real estate market. In previous governments, mainly under Roh Moo-hyun, DTI and LTV regulations were used to cool down the housing market.
“DTI and LTV are both regulations related to financial soundness, and it was a problem using those regulations as a real estate speculation policy,” Suh said. “I personally doubt that by easing DTI and LTV regulations the real estate market will revive. I believe it is right for the Financial Services Commission to enforce those two regulations.”
In other areas, the new minister spoke about the construction, transportation and distribution industries that had in the past laid a foundation for Korea’s economic growth.
“Overseas construction [projects] should be diversified into regions like Africa and Central and South America,” he said.
By Lee Eun-joo [firstname.lastname@example.org]