Real estate politics is the problem

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Real estate politics is the problem

Published: 28 Oct. 2025, 00:02

Audio report: written by reporters, read by AI

Suh Kyoung-ho

The author is an editorial writer at the JoongAng Ilbo.

Dutch economist Jan Pen illustrated income inequality vividly in his 1971 book “Income Distribution” with the image of what he termed a “parade of dwarfs.” In his thought experiment, everyone in Britain marches in a line, with height proportional to income. The procession begins with bankrupt businesspeople whose heads are buried in the ground, followed by the unemployed and low-wage workers barely half a meter tall. Average height appears 48 minutes into the hourlong parade. In the final six minutes, those over two meters tall — representing the top 10 percent — march by, and in the last seconds, giants dozens of meters high dominate the scene.

Apartment complexes in Seoul are seen from Namsan on Oct. 27, as apartment sale prices in the capital recorded the highest increase of the year so far, based on data collected before the government’s Oct. 15 real estate measures were announced. [YONHAP]

Using Pen’s method, imagine a parade of Korea’s apartments, with each unit’s height reflecting its market price. Based on the national average apartment price of 538.43 million won in August, the average height would be 170 centimeters. The parade opens with small-city apartments worth 150 million won — just 47 centimeters tall. Around 15 minutes in come regional metropolitan apartments priced at 320 million won. Mid-priced units worth 470 million won appear at 30 minutes, standing at 148 centimeters — still shorter than average. At 40 minutes, the average height arrives. By 45 minutes, new apartments on the outskirts of the capital region priced at 750 million won stand 237 centimeters tall.

In the final stretch, apartments in Seoul averaging more than 1.4 billion won — and the so-called “15-billion-won working-class apartments” mentioned by Democratic Party lawmaker BOK Ki-wang — appear as towering figures. The luxury apartments in Seoul’s three Gangnam districts and Yongsan, priced over 4 billion won, would reach heights of 12.6 meters, closing the parade.

If the comparison included multifamily homes and single houses, or if measured by ownership rather than property, the line of the small and the poor would lengthen while the giants would grow taller. The skyline of Korea’s housing market is dominated by tiny figures looking up at a few giants. We live, in effect, in the “Republic of Seoul and the Capital Region.”

Controversy continues over the government’s Oct. 15 real estate measures, which restrict gap investments — buying homes with rental deposits — in parts of Seoul and Gyeonggi and which tighten housing loans. Critics say the policy infringes on private property rights and stifles middle-class aspirations for homeownership, while others warn it will destabilize rental markets. These are concerns the government must take seriously. Yet the opposition’s demand for a full repeal is misguided. The policy may be unpopular, but it is necessary. Calls for the resignations of the “real estate trio” — Kim Yong-beom, Koo Yun-cheol, and Lee Eok-won — are also excessive. Owning a luxury apartment in Gangnam should not disqualify one from shaping housing policy. As Kim Yong-beom, the presidential chief of policy, wrote recently, “Extraordinary times call for extraordinary measures.” The inconvenience faced by genuine homebuyers is the price of stabilizing the market. The key now is to use this pause to deliver tangible progress on housing supply.

Finance Minister and Deputy Prime Minister Koo Yun-cheol poses for a photo before the start of a market situation review meeting at the Korea Federation of Banks in Jung District, central Seoul, on October 24. From left: Financial Supervisory Service Governor Lee Chan-jin, Bank of Korea Governor Rhee Chang-yong, Deputy Prime Minister Koo Yun-cheol, and Financial Services Commission Chairman Lee Eok-won. [MINISTRY OF ECONOMY AND FINANCE]

Kim Soo-hyun, former presidential policy chief under the Moon Jae-in administration, offered valuable reflections in his book “Real Estate and Politics” (2022). Looking back, he admitted the government’s failure to prevent the housing surge in its later years. First, loan restrictions should have been stronger and implemented sooner, tightening the debt service ratio (DSR) and closing loopholes in rental loans. Second, the government failed to calm supply fears early. Third, confusion over property tax increases and rental business incentives eroded public trust and weakened leadership.

The most revealing point in Kim’s analysis is his critique that both the Moon administration and the Bank of Korea made “slow and insensitive decisions” in hesitating to tighten liquidity for economic defense. When money floods the market, housing prices inevitably rise. The current administration’s 728-trillion-won expansionary budget reflects a similar dilemma. While the government watches every penny of public spending, it has yet to grasp that the true instability lies not in how much money is spent — but in where it flows.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.