Will house prices come down?

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Will house prices come down?

Lee Hyun-sang
The author is a columnist of the JoongAng Ilbo.


I was deeply touched by the June 9 column by author Jang Kang-myung published in the JoongAng Ilbo on housing issues. He said he had ended up drinking with his wife after his lease expired and he was left searching in vain for somewhere to live.

I sympathized with his regret that he rented instead of buying a home due to his misplaced faith in the Moon Jae-in administration, as I also share the conundrum. If a famous novelist can face such a problem, how harsh is housing insecurity for everybody else. The president apologetically said his government had been “whipped by a bamboo clapper” by the people due to the housing problem. That is putting it lighytly — many people think a club is more suitable.

The Democratic Party (DP) leadership feigned “a radical move” by asking 12 lawmakers suspected of real estate speculation to leave the party. Despite the suddenness, it at least demonstrated empathy with the urgency and gravity of the housing problem. But it turned out to be a show. None of the 12 members followed the order, to the embarrassment of the tears Song Young-gil had shown upon announcing the decision.

The gesture was grand, but the action empty. The DP vowed “unimaginable” moves to increase supply. The so-called panacea was “A Home for Everyone.” Under the idea, tenants could buy a house that they had rented for 10 years at a fixed price. Song claimed it was a “revolutionary housing project” that won’t require massive public spending. But it isn’t economically feasible. It is structured to move the burden from the tenant to the builder of the housing. Few builders would want to join a project that cannot make money. It would only work if housing value appreciates over 10 years. The DP is more or less confessing that taming the housing market is beyond its capacity.

The ruling front is barking up the wrong tree on the real estate issue. It finally realized that the answer lies in housing supply, but cannot come up with feasible solutions. The entirely state-led supply measures unveiled on Feb. 4 are going nowhere. There is no incentive to spur housing development by private builders. Measures taken without respect for the market cannot be of any help. Housing projects in government complexes in Gwacheon and Taereung Golf Course have fallen silent in the face of residents’ opposition.

Emergency problems require an emergency response. But emergency action cannot be taken without a sense of urgency. Despite all the rhetoric, there is no sense of urgency and courage on the ruling front. The party chained to its ideology merely comes up with makeshift measures. It feigns deliberation and offers to soften tax to win votes from the middle class for the next presidential election.

Easing the greenbelt zone is one idea that would demand enormous courage. The government has tapped the idea whenever it addressed the supply issue. But it had no courage to push ahead with it on the belief that the greenbelt zone is sacred, even when more than 20 percent of the green land on the outskirts of Seoul is of low quality with no need of preservation.

If it had examined the greenbelt zone from the early stage, the real estate market would have looked quite different now. The DP has revisited the greenbelt this time, but decided to put it back for the next government, citing the need for social consensus.

The people are tired and frustrated. The sky-high housing prices will never come down unless the fundamental problem is addressed. There must be radical supply to enhance the effect of the public role and deregulatory actions.

The 2 million-unit construction under the Roh Tae-woo administration and massive housing projects under the Lee Myung-bak government helped stabilize the housing market.

A pitcher under pressure often leaves the mound after trying out various skills without throwing a straight ball. The agony of the people must end.
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