Don’t do anything, pleaseThe ramifications of the government’s repeatedly damaging real estate policies on the housing market are broadening. Anyone trying to move for school, workplace or marriage cannot find a place. Tenants are worried about a steep rise in rent fees. A working civilian no longer can dream of saving up to own a home one day. Homeowners fear the arrival of a tax bill they can no longer afford. The real estate policy has become one of the biggest dangers to people’s livelihoods.
The hardship is no longer restricted to the capital region. According to the Korea Appraisal Board, apartment prices across the nation added 0.21 percent Friday from a week earlier. The average prices outside the capital and less affected by regulations rose 0.27 percent, the fastest since May 2012. The averages in five major cities other than Seoul — Busan, Daegu, Daejon, Ulsan and Gwangju — jumped 0.39 percent from a week before. The spike in housing prices also spilled over to the jeonse (long-term rent) prices. Jeonse prices went up not only in Seoul and surrounding areas, but also in the five major cities.
Housing and rent prices simultaneously went up in eight rural regions outside the capital and metropolitan areas. The repercussions from the clampdown on Gangnam apartment prices in southern Seoul have spread to northern and outer Seoul as well as to the urban areas far off the capital. The ballooning effect has resulted from excessive regulations. The employment of comprehensive property taxes by President Roh Moo-hyun in 2005 also caused similar broad side effects.
The problems are graver today. Housing price polarization deepened after the Moon Jae-in administration raised the appraisal home value to 90 percent of the market value for taxation and enforced three rent-related laws. People rushed to own a decent home for fear of heavy taxes on their extra homes. As a result, housing prices in expensive neighborhoods like Haeundae District in Busan and Suseong District in Daegu have jumped noticeably.
Still, the government is unwilling to compromise. It prepares to announce its 24th set of real estate stabilization measures. Many say the best the government can do is doing nothing. A gimmick policy cannot work. Policymakers must seriously question themselves for what and whom their policy serves.