Makeshift measures are no solutionKim Sang-jo, Blue House policy chief, was sacked for raising the rent of his apartment in a posh neighborhood in Gangnam district by 14 percent while renewing the contract just two days before the new law capping increase of rent at 5 percent went into effect in August. The dismissal came fast for the Moon Jae-in administration which usually makes exemptions for its inner circle despite heavy criticism from the public or the opposition. Its fast action is to stem further negative impact on the April 7 mayoral by-elections in Seoul and Busan amid simmering public rage over housing prices and scandals.
Kim stayed in command over real estate policy despite wreckage on the rent market from the controversial rental-related laws. But he could not avoid accountability this time because the architect behind hard-line real estate policy was found to have avoided damage from the rent laws at a time when the scandalous speculation by Korea Land & Housing Corp. employees via inside information has enraged the people. He has cost the entire credence in the government’s real estate policy.
Still, the Blue House and ruling front persist even after more outrageous policies. The ruling Democratic Party is proposing a bill to seize gains from past real estate investments by public officials. It plans to extend the requirements for disclosure of assets of civil servants to all grades and ban officials related to real estate affairs from purchasing new property. Illicit gains from property speculation can be regulated with existing laws. But its attempt to seek retroactive seizure of property capital gains can be contested in the constitutional context. Restricting the right to properties by public employees can only be an attempt to appease public sentiment ahead of the by-elections.
The president still remains detached from public sentiment. He ordered stronger screening in granting purchase of farmland. He regretted being less tough in addressing structural imbalances in estate ownership and commanded a stronger drive to rooting out real estate corruption. The evasive rhetoric sounds like campaign slogan. Moon also ordered the establishment of a new real estate oversight board as the solution to root out speculation despite the controversy over the state control of private property.
Speculation has been rife under this administration despite its campaign to fight speculation because its policies only fanned property prices. Another watchdog cannot solve the problem. The government’s control over the market and domineering over the people cannot win a battle against speculation. It is sad the government remains clueless despite its 25 sets of failed real estate measures.