Rising home prices demand more than quick fixes

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Rising home prices demand more than quick fixes

Published: 30 Jun. 2025, 00:02 Updated: 30 Jun. 2025, 13:57

Audio report: written by reporters, read by AI

Chang Se-jeong

The author is an editorial writer of the JoongAng Ilbo.

Real estate policy has long been one of the most delicate issues in Korean governance. The market reacts swiftly, often punishing heavy-handed interventions. Like handling a live warhead, real estate regulation demands precision. Past administrations have struggled to manage it effectively. Statistical trends over the past two decades suggest that progressive administrations have consistently overseen significant spikes in housing prices. The question now is whether the administration of President Lee Jae Myung will prove to be an exception.

The Roh Moo-hyun and Moon Jae-in governments viewed redevelopment and reconstruction with skepticism, placing greater emphasis on suppressing demand than expanding supply. That approach led to soaring prices, a loss of public trust, and ultimately, their failure to secure a second term for their parties. Policies designed to support ordinary citizens ended up undermining the housing aspirations of not only the working class but also the middle class.

Apartment sale and rental listings are displayed at a real estate agency in Seoul on June 25, as apartment prices in the capital rose for the 20th consecutive week, marking the steepest weekly increase in six years and nine months. According to the Korea Real Estate Board's weekly report released the same day, apartment prices in Seoul rose 0.36 percent from the previous week—the largest weekly gain since a 0.45 percent increase in the second week of September 2018 during the Moon Jae-in administration. [NEWS1]

Public frustration grew when key government figures during the Moon administration, including Kim Eui-kyeom and Jang Ha-sung, were revealed to have profited from strategic real estate investments. Allegations of manipulated real estate statistics further tarnished the administration. Eleven former and current officials, including former presidential policy chiefs Kim Soo-hyun and Kim Sang-jo, Land Minister Kim Hyun-mee and Statistics Korea chief Kang Shin-wook, were indicted and now face trial.

Although the new administration is barely a month old, housing concerns dominate the public discourse. While the KOSPI index recently crossed the 3,100 mark for the first time in nearly four years, attention has shifted to the rapid rise in housing prices in Seoul. According to data released by the Korea Real Estate Board on June 26, apartment prices in the capital rose by 0.43 percent in the fourth week of June — the steepest weekly increase since September 2018.

Apartment buildings in Seoul are seen on June 19, as apartment prices in the capital continued to climb, recording the largest weekly increase in six years and nine months in the third week of June. [YONHAP]

Despite the sharp increase in prices around the June 3 presidential election, the government took a passive stance during the transition period. That changed on June 27 when the Financial Services Commission announced that mortgage loans for homes in the capital region and regulated areas would be capped uniformly at 600 million won ($440,628). The abrupt policy has sparked debate. While some support the measure as a way to curb speculative demand, others argue it unfairly blocks young and middle-income buyers from entering the market unless they already possess substantial liquidity.

Concerns are also rising that the government may expand the land transaction permit system, currently in effect in Seoul’s Gangnam districts and Yongsan, to the rest of the capital.

The housing debate has been further complicated by allegations of real estate speculation involving high-level officials. Foreign Minister nominee Cho Hyun has faced scrutiny for a land purchase made by his spouse in 2003, just before the area was designated for redevelopment. The land was later sold for a profit of approximately 1 billion won. Cho stated, “We felt lucky at the time, but it was not a speculative act driven by ill intent.” The public has not been convinced.

President Lee is well aware of the sensitivities surrounding real estate policy. The delay in nominating a land minister underscores the weight of the decision. According to sources, candidates fall into three broad categories: academics such as Lee Sang-kyung of Gachon University, Lim Jae-man of Sejong University, and Kim Se-yong of Korea University; former bureaucrats including Democratic Party lawmakers Maeng Sung-kyu and Sohn Myung-soo; and experienced politicians like Yoon Hu-deok, Cho Jeong-sik, and Cho Seung-rae, all from the Democratic Party.

Whomever the nominee, observers stress that the Lee administration must avoid repeating the ideologically driven missteps of Moon’s policy team, particularly those made by Kim Soo-hyun and Kim Hyun-mee.

President Lee repeatedly vowed during the campaign not to rely on taxation to control housing prices. Real estate policy received relatively little attention during the election, suggesting a deliberate contrast with the Moon government, which issued 28 policy measures over five years with disappointing results.

The Ministry of Land, Infrastructure and Transport's office at the government complex in Sejong. [YONHAP]

Some analysts believe the new administration may be trying to shift liquidity away from real estate toward other sectors such as equities and artificial intelligence. But experts caution that a simple cap on lending will likely offer only short-term relief. Instead, a comprehensive package combining financial regulations, tax reform, and increased housing supply—especially through public land and permanent rental housing—is urgently needed.

In the long term, Korea needs real estate policies that restore market stability while ensuring housing security for all. Piecemeal measures will not be enough to tame runaway housing prices. A comprehensive and sustainable plan must begin now—lest the nation relive the policy failures of the past.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.