Real estate restrictions must go

The Ministry of Land, Infrastructure and Transport has decided to remove remaining regulations imposed during the height of the overheated real estate market in a desperate push to reinvigorate the market amid fledgling signs of recovery.

It announced it will scrap a kind of tax on redeveloped property that assessed homeowners 25 percent of gains in property value within the year.

Buyers of new homes will be able to sell their ownership rights within six months instead of the current one-year cap.

The removal of various regulations made hurriedly to fight speculation and overheating could restore the free-market function. Few now believe the level of overheating and bubbles of the past would be possible, even with the removal of regulations. Quite simply, home demand cannot grow as before due to demographic changes.

What’s needed is not higher home values but normalized trade in the real estate market. Homes are primary assets for most common Koreans, with real estate accounting for more than 70 percent of household assets. Homeowners should have the
freedom to sell their properties to repay debts and save more effectively for their old age. Regulations should not prevent people from selling their properties because they could lose more than gain from the sales.

The ball is in the court of the National Assembly. Lawmakers should expedite the legislation so the deregulation takes place and helps normalize the real estate trade.