Yoon Hee-sook: "Moon Administration Only Used Demand Suppression Measures, Causing This Mess... Supply Must Be Increased Where Needed"

[Image source=Yonhap News]

[Asia Economy Reporters Kim Hyemin and Im Chunhan] Yoon Heesook, Chairperson of the Economic Innovation Committee of the United Future Party, stated on the 8th that the biggest failure of the Moon Jae-in administration's real estate policy is "intentionally excluding the construction of desired housing in desired locations by the public," adding, "This situation arose because only demand suppression measures were used."

Chairperson Yoon made these remarks during a full meeting of the Economic Innovation Committee held at the National Assembly in the afternoon, asserting, "We need to increase supply so that many houses are built in the places people want."

Yoon pointed out, "Over the past three years, the Moon administration has strengthened various regulations such as raising and expanding the comprehensive real estate tax, increasing official land prices, tightening capital gains tax, restricting mortgage loans, and limiting the resale of pre-sale rights, but the housing market overheating has worsened," noting, "Under the Moon administration, apartment prices in Seoul have risen by 45.3%." Compared to the lowest point in December 2012 over the past decade, prices have increased by 84.7%.

He claimed, "The Moon administration is using the real estate policy tools of the Participatory Government, which destabilized the real estate market to the extent that it is called a historic failure."

Chairperson Yoon said, "The Moon administration's real estate policy mainly focuses on demand suppression. It suppresses demand through financial measures such as loan restrictions, price caps on pre-sale, and resale restrictions, while continuously maintaining tightly structured supply regulations like excess profit recovery and reconstruction safety inspections," adding, "They are pursuing strange solutions with the pure goal of preventing reconstruction and redevelopment from happening."

He emphasized, "The timing of using demand suppression measures is when house prices in Gangnam show signs of rising, and financial and tax regulations are indiscriminately imposed. No country in the world uses such macro regulations to control house prices in specific areas," explaining, "Because unintended effects occur due to too many people." He added, "A characteristic of the Moon administration's real estate measures is that they constantly create enemies, from multi-homeowners and reconstruction to recently gap investment."

Chairperson Yoon criticized, "Speculators can temporarily raise real estate prices, but since actual buyers also try to purchase appreciating properties, it is fundamentally difficult to distinguish between actual buyers and speculators," and said, "The government is even labeling young couples who are struggling with jeonse deposits and trying to buy their first home as gap investors."

He stressed that the most textbook solution is to supply housing where there is demand. Yoon argued, "Ignoring the demand of many people who want to live in Seoul and instead strongly suppressing supply has increased scarcity," and insisted, "We need to increase supply so that many houses are built in the places people want."

Chairperson Yoon added, "The government's policy capacity should be devoted to housing welfare for low-income groups and support for first-time homebuyers without housing," and emphasized, "It is urgent to shift the paradigm to a genuinely market-friendly direction, which has only been nominally advocated for over the past 20 years."