Construction CEOs want quick housing action

Construction industry executives have asked the government to take additional measures quickly to revive the country’s housing market.

Land Minister Suh Seung-hwan and 14 industry leaders discussed the situation yesterday at a meeting in Seoul.

The meeting was originally designed to explain the government’s follow-up plan to the April 1 real estate stimulus package intended to reduce the housing supply.

“The local housing industry’s current situation is worse than what was in the Asian financial crisis and global financial crisis,” said Park Chang-min, chairman of Korea Housing Association. “Proposals like eliminating the ceiling on apartment prices and abolishing the capital gains tax for owners of multiple homes should be quickly processed at the National Assembly.”

Industry officials also asked the land ministry to lower the acquisition tax permanently.

The tax revision is currently under discussion involving the ministries of land, infrastructure and transport, strategy and finance, and security and public administration.

“As the temporary acquisition tax cut ended at the end of June, a permanent tax revision should be applied retroactively from July,” said Kim Choong-jae, chairman of the Korea Housing Builders Association.

Others proposed that the government increase tax benefits for mortgages. In a follow-up real estate stimulus plan announced last week, the government did not change the standard for mortgage loan interest tax deductions, meaning they will apply only to homes that cost 300 million won or less.

Industry officials said the deduction cutoff should be 600 million won ($ 267,213), and land ministry officials explained the standard could be revised in the National Assembly.

Suh said he will actively consider industry proposals making policy, but for now the focus is on reducing the supply of unsold houses.

“Since the oversupply of houses is pressuring the market, it is difficult to stabilize the market only with tax revisions and financial support,” he said. “We hope the construction industry actively supports our plan to solve the oversupply problem.”

The government last week announced that it will delay or cancel public apartment construction projects and strengthen land-use requirements for approval of private housing projects.

CEOs of the construction firms yesterday said that they understand what the government is trying to do, but tax changes should be conducted along with cutting housing supply.

“For the private sector to control supply and time of construction, we need some information about details of public housing construction projects such as location and volume,” said Hyundai E&C CEO Jung Soo-hyun.

By joo kyung-don [kjoo@joongang.co.kr]