Terrible obstinacyA joint statement by the Deputy Prime Minister for the Economy and Finance Minister Hong Nam-ki with other cabinet ministers on real estate affairs was utterly disappointing. Hong and the government neglected the follies of the public policy — the main cause of the current mess — and merely asked the people to comply with it.
The real estate problem cannot be solved through such a top-down approach. Today’s dire consequences from multiple regulations over the last four years are living proof. The government must stop its anti-market regulatory approach first. It must allow refurbishments and new supply where the demand is high if it wants to stabilize the prices.
But the government steadfastly goes on its way. People with or without homes must endure the pain as a result. The steep rise in the appraisals of home values have been most brutal. Hong claims the repercussions affect only the top 1 percent of expensive homes. But that cannot explain why families across the capital and major cities have all received much fatter property tax bills.
People with homes should consider themselves lucky to have a home despite the heavy tax burden. But those without homes are at their wits’ end, struggling with the ever-rising rent prices. Rent prices of apartments in Seoul have risen due to sharply reduced supplies since the controversial three laws related to tenants’ rights in July. Apartment rent in Seoul have jumped more than 130 million won ($112,650) since to an average of 600 million won. The nationwide apartment rent average has been on the rise for 107 consecutive weeks.
As the market conditions worsen, authorities resort further to denial. They claim supplies are not short and turn to other factors than demand. They point to artificial inflation of apartment prices posting to prop up the deal value. The government identified 12 fraudulent cases after tracking 710,000 apartment deals from February. It is absurd to claim 12 cases out of 710,000 as the primary cause for apartment price spike. Citing “higher renewal rate,” Hong claims housing security has enhanced through the tenants’ law. The Ministry of Land has been publicizing the positive effects of the three tenants’ law with tax money to the vexation of the people.
Hong even brought the police chief to the press conference. The presence of police chief could look intimidating in the eyes of the people. Hong warned people to refrain from home purchases as housing prices could fall sharply. The real estate agony will never end if the government keeps up excessive regulation and anti-market policy and dumps all the blame on the people.