The property conundrum
The author is a columnist of the JoongAng Ilbo.
Real estate is out of control. The headlines in the newspapers are about nothing but real estate these days. On top of the bombardment of taxes, financial and trade regulations, as well as the idea of allowing the development of some of the greenbelt zones in Seoul, relocating the Blue House and National Assembly have even been floated. All of this being carried out to fulfill the ultimate goal of lowering apartment prices.
The bafflement of the ruling party is understandable as it witnessed a quick souring in public sentiment and an unphased spike in apartment prices. Even accountants say they cannot keep up with the flip-flops in housing taxes. Housing has become the biggest worry for the entire population as those with homes must be preoccupied about taxes and those without about merely securing a roof above their heads.
Heedlessness from the government and ruling party have worsened the matter. The green belts have been dubbed “political belts” as they can be highly controversial. Even military regimes were careful on that issue. The first advice from outgoing land ministers to their successors was to “never discuss green belts.” Yet the Blue House suggested an easing of green belt zones to manifest its will to increase housing supplies. From the racket it has caused, however, its will and intention have come under suspicion.
But Moon backtracked after presidential hopefuls in the ruling party opposed the idea of lifting regulations on the development of greenbelts.
His fast response contrasts with his recalcitrance toward increasing calls for a reversal in his plan to phase out nuclear energy from the opposition party and the conservative front. Alternatives to increased supplies in the capital have not come up. He may not have been eager to increase housing supplies in the first place.
The highlight of the farce has been the sudden hype over moving key public offices, including the Blue House and National Assembly, to the Sejong Administrative City. The issue is not one to be suddenly raised by a ruling party floor leader as the means to bring down property values in Seoul. The idea can hurt national dignity. Relocating the capital requires a serious and thorough debate. It is not something to be decided by a ruling party alone or even the National Assembly. It needs to be put to a referendum so as not to defy an earlier Constitutional Court ruling. If a national referendum on the issue is difficult, it could be put to a separate vote on the next presidential election day.
If the relocation of the capital takes place, the National Assembly must move. The Assembly must not be left in Yeouido to be used as a Seoul outpost. There would be no meaning of making Sejong a genuine administrative capital if lawmakers call ministers and to Seoul every time they need them. It would be best to sell the premises of the National Assembly and use the proceeds to cover relocation costs. The lot could be redeveloped to groom the Yeouido district as a mecca for financial and investment banks in Asia.
No new measures by the government will bring down soaring real estate prices in Gangnam. The battle is already lost for the incumbent administration. Any new development would take at least four years. Relocating the remaining administrative and legislative branches also would take years.
Doing nothing more might be the best the government can do. People won’t buy houses if they are too expensive. But they must be able to afford rent. If they have to get loans to live in rented homes at inflated prices, their lives and the economy would be ruined. If the government pushes ahead with legislation that fans rent prices further, the ruling party could risk losing governing power. What ideas will it come up with then?