Is it wrong to desire a decent home?

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Is it wrong to desire a decent home?

 Korean society has become even more deeply polarized since the liberal Moon Jae-in administration came to power three years ago after two terms of conservative administrations.
The JoongAng Ilbo special investigation team asked six fundamental questions to address some of the challenges facing society today. 
Is it wrong to desire a decent home?

Housing is indispensable to upholding human dignity. It must provide more than shelter from wind and rain. The desire to live in a better home grows as incomes and living standards improve. Everyone wants to live in a bigger and more comfortable space in a good neighborhood.  
But land is restricted to meet all human desires. The supply cannot live up to the demand. Homes have come to represent social status and wealth. Housing financing has become a ladder for upward mobility for the middle class, providing leverage to build assets. Some question the justice in housing wealth and monetization as passive income from fixed asset does not come from hard earning.  
The housing issue becomes more complicated in Korea due to its social features. While income from employment grows at a snail’s pace, pensions are insubstantial and the social safety net is unreliable.
Does the government have a role to help realize Koreans’ dreams for a decent home?

The conviction that housing can’t be an investment is false

Yun Hee-suk

Rep. Yun Hee-suk of the main opposition People Power Party (PPP), a legislative rookie who debuted with an impressive 5-minute speech on the equal rights of tenants and landlords, cited the unfinished novel “The First Man” by Albert Camus when she faced questions about real estate. The hero in the autobiographical novel grows up as if the he were the first man to experience and learn from deprivation.
“The government acts as if it were the ‘first man,’” Yun said. “Although it has the abundant experience and knowledge, it intentionally pushed them away. It has isolated itself. It won’t change unless it faces a life-or-death moment.”
The following are excerpts from an interview taken in her office on Sept. 17.  
Q. How do you see the unprecedented rise in housing prices?  
A. Home prices jumped this much not from evil and selfish design by a small minority, but from a desire of broad populations. Public policy should be blamed for this phenomenon.
The government claims speculative force is behind it.  
How can one strictly differentiate between speculation and investment? The government calls it “speculation” if big money is made from the investment. Whether the motivation is for speculation or investment, both are made with the expectation of growth in asset value. Yet the policy defines the desire as evil. That only heightened the exclusivity of good homes.
Isn’t housing and land already in short supply?  
It is important to increase supplies to meet the desires of the middle class to live in better and more spacious homes. The government has sent a message that homes in more desirable districts will become harder to get. It should have lifted the exclusivity in the areas, and yet it has done the opposite to send the prices soaring.
Isn’t ample liquidity part of the reason?  
Lush liquidity cannot be entirely blamed, because apartment prices have shot up in certain districts of Seoul. Even people living in far southern Jeju Island know how much an apartment costs in Gangnam. There is no country like this anywhere in the world. 
It has become impossible to buy a home in Seoul even if you save all your earnings. Isn’t real estate worsening inequalities?  
It is a sad situation. But the solution does not lie entirely in real estate. Income has become stagnant because of waning labor productivity. The economy overall has lost steam. What fixes inequality most are human resources. Of course real estate is a factor. But inequality cannot be addressed if the focus is entirely on real estate. Population density in Seoul due to greater opportunities in jobs and education also cannot be blamed on real estate.
The younger generation complains of the loss of a real estate ladder to reaching a higher status.  
The gap should be narrowed for people to climb up the ladder. Easier loans provide that service. Yet the government has toughened mortgage loans to rein in home prices in Gangnam. No other country implements broad regulations to contain home prices in a certain area. People with stable income should be able to take out loans to own their home. That is a social and economic policy.
What should be the goal of real estate policy?  
It must aim to provide homes to those who wish to own them. The government needs to help the low-income class aggressively while supervising the market to meet the demands of those who can afford them. But today’s policy is based on black-and-white dogma that a home should be where one lives and cannot be an object for investment and trade. The dogma already failed in the past Roh Moo-hyun administration. It is arrogant to revive it.
Is a house an asset or a residence?  
A home is an accumulation of human desires and therefore has a complicated feature. Ask anyone the same question and they will say both. The belief has not suddenly arisen, but spans many generations. The belief cannot be fixed overnight. The government must not interfere or suppress individual dreams. A policy must accept and meet multiple and diverse wishes.
Still, don’t homes and land have some public feature?  
Emphasis on a public role means a seizure of profit from real estate deals. It would outright challenge the constitutional right to individual property if the state takes away all the profit. A neighborhood could become highly dense if the floor-to-area [FAR] ratio is extended. Retrieving profits from real state deals is necessary to some extent to address problems from development. The question is balance, not whether to have a public role.

A society cannot be just if many people cannot buy a home 

Jin Sung-joon

“It is not normal or just,” ruling Democratic Party (DP) Rep. Jin Sung-joon said of our real estate market. He pointed to the house price-to-income ratio (PIR) that measures how much must be saved to buy a home. “A PIR of five is a normal level. In Seoul, the ratio is 12 to 14. This cannot be right. Homes are valued not just by the landlord’s efforts, but the price also reflects traffic or convenient infrastructure of the neighborhood. It is not right for the landlord to take all the profits.” We spoke with him in his office on Sept. 22.  
Q. So what is normal?  
A. The basic goal of real estate policy is to encourage each family to own one home. If the home is not for residential or living purposes, the landlord must share the social liability from owning the real estate in excess. The right to residence is a basic right, and a home is an indispensable public property. A society cannot be just if many people cannot buy a home and if certain properties are dominated by a certain class.  
Isn’t the emphasis on public features a violation of property rights?  
A home is an asset and living space. Too much attention was placed on the asset perspective while neglecting the public role. Laws and systems are needed to coordinate the conflicts from personal desires. Real estate is behind wealth inequalities. If they are not addressed, there is no future. The time has come to frankly discuss the issue.
Is it inherently bad to desire a profit from real estate?
Everyone hopes to live in a better home and wants higher value in their home. That cannot be blamed. But the desire can do harm to society if one wants to make money out of real estate no matter what. Society has somewhat exacerbated this.
How has society exacerbated this phenomenon?  
Past governments have used real estate to stimulate the economy. Real estate has become an economic tool for the government. That belief has led to housing supplies by the private sector over public enterprises and a desire to build wealth out of it. But that cannot go on.  
A single home is often the main asset for a household and provides security for old age. It is about livelihood, not good and bad. 
We lived with the long-standing view that we must own a home for old-age security and should leave a home for inheritance. The obsession over a home would lessen if old age could be supported by public welfare. Real estate policies should be accompanied with social welfare.
Single homeowners have been slapped with heavy taxes, and disputes between landlords and tenants surged after real estate measures. 
Everyone is responsible for today’s real estate mess. Actions were needed, and immediate pain is inevitable. If the burden is too much, there should be corresponding actions. For instance, if appraised housing value goes up too fast, property taxes on mid- to low-priced apartment units should be lowered. Still, the tail must not wag the dog. Policy must stay consistent.
Are multiple home owners speculative forces?  
It is not easy to differentiate between speculation and investment. We are not saying that people with multiple homes should be regulated because their ownership is bad. They are levied with heavier taxes as a kind of plea to share social responsibility to care for the needy people.
Home ownership has become difficult after 23 sets of real estate measures.  
Home purchases have become difficult due to loan regulations. But once housing prices become stabilized, they will be eased one day. People will be able to buy home with loans when prices are lower.
Some think homes are being regulated to prevent society from turning conservative.  
I don’t agree. Our party has won parliamentary seats even in districts where housing prices rose. Voters vote on their beliefs. Having a home or not does not define a liberal or conservative.

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