Throwing away the ladders
The author is an editorial writer of the JoongAng Ilbo.
Not many may remember the exact words of President Moon Jae-in on the real estate market during his town halls with the public which were televised live in November last year. “Real estate prices across the country have come down and stabilized. In the past, we heard of the crazy jeonse (long-term rents) and monthly rent prices. But under our government, they are very stable. Prices are rising for expensive apartments in Seoul. But we will bring them down. I am confident of a success in our real estate policy.”
His government is entirely at fault if the real estate market, which became “stable” as Moon said a year ago, came to today’s disastrous state. Former liberal President Kim Dae-jung famously said, “I had never lied. I just couldn’t keep all my promises.” Moon either lied a year ago or could not live up to his promise.
Last week, President Moon looked around a multi-residential public rental complex in Dongtan, Gyeonggi. Despite all the media hoopla over what he said on a tour of a 26-square-meter (280-square-feet) public apartment, he emphasized the social need for cheap apartments for the lower income class and ladders to better homes.
However, the problem was a difference in the ladder the president wants to offer and what the people want. In the small public apartment, Moon ordered outgoing Land Minister Kim Hyun-mee and Byeon Chang-heum, a nominee for the post, to offer the people a “housing ladder so that public apartments can serve as a stable and comfortable home for citizens without having to own one.”
Moon stressed the “need for a change in perspective.” In other words, he was suggesting the working class could start from a modest studio rent and then move into bigger rental space when the family gets bigger.
He indicated that his administration’s 25th set of real estate measures will focus on a massive public rental program. But the government failed to understand what the people want. They want to live in “their” home, not that of others. To them, housing security and welfare is having their own home. Every Korean dreams of the housing ladder where they start from a one-room studio and move up to rental housing and later buy one’s own house with savings and bank loans. Even the Land Minister nominee Byeon has taken out loans to buy a home in Bangbae-dong, southern Seoul.
No matter how decent public rentals may be, the aspiration to own a home won’t easily die down. A simple “change in the perspective” is not enough. Moreover, a person should not feel guilty for wishing to live in one’s own home instead of a rental. Economic policies must be based on human desires.
The housing ladder wanted by most people is crumbling down fast. Few can afford the super-fast elevator to get to the sky-high apartments. Not only apartments in certain rich neighborhoods in Seoul, but the mid-range apartments in inner Seoul and outside the capital have all shot up. Jeonse and monthly leases also jumped. Every citizen has been affected.
The president’s eyes are fixed at the bottom of the housing ladder. The increase in public rentals can comfort the poor, but cannot satisfy the greater population. Looking for a solution in real estate problems from public rents is like itching the feet when the head needs a scratch. What is most imperative is to lift the multiple regulations that have nearly wiped out supply to normalize the market mechanism.
The president would have visited the public housing complex with good intentions. But he has not sent the right message to the market. If he had dropped by any realtor office, he would have heard about the market wreck. Then he would realize why his approval rating is skidding rapidly.