[Desk Column] A Country Holding 'House Price' Meetings Every Week

A tougher-than-usual summer has passed. Four typhoons?'Jangmi,' 'Bavi,' 'Maysak,' and 'Haishen'?hit the Korean Peninsula in succession at the peak of summer, causing widespread flooding across the country. Before the damage from the typhoons could even be fully addressed, economic activities virtually came to a halt over the past two weeks due to the implementation of social distancing level 2.5 in response to the spread of the novel coronavirus infection (COVID-19).

Despite this emergency situation, there has been one government meeting held without fail every week. On the early morning of August 5, key ministers gathered at the Gwanghwamun Government Seoul Office. The meeting, chaired by Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki, was attended by Minister of Land, Infrastructure and Transport Kim Hyun-mi, as well as representatives from the National Tax Service, National Police Agency, Financial Supervisory Service, Ministry of the Interior and Safety, the Blue House’s Chief Economic Secretary, and senior officials from Seoul City. It was a pan-government meeting that would typically be convened only in serious national emergencies.

In his opening remarks at the first meeting, Deputy Prime Minister Hong stated, "Ultimately, we will create conditions and an environment where genuine buyers can secure homes through their hard work when they need them." The 'Real Estate Market Inspection Meeting of Related Ministers,' which began with this declaration, has already surpassed six sessions as of last week. Throughout this process, the government has operated a 'Real Estate Rapid Response Team' daily to monitor the market and support this meeting body.

This is unprecedented. In the reporter’s memory, there has never been a weekly meeting involving not only related ministries but also the prosecution to inspect housing prices. It makes one wonder how deep the trauma over housing prices has been over the past three years for the government to take such measures.

Looking at the content discussed and the statements made public during the six meetings, one might question why such a grand meeting is held and why the results are disclosed.

The content of the meetings, which have continued for nearly a month and a half, is disappointing. To summarize: ▲ the policies are right, and ▲ speculative forces will never be tolerated?these points are repeatedly emphasized.

In particular, policy promotion has intensified as the meetings have progressed. "The effects of the measures are appearing in the housing market with a time lag (3rd meeting)." "False listings have decreased due to enforcement of the Licensed Real Estate Agents Act (4th meeting)." "Pre-sale subscriptions are expected to alleviate genuine buyers’ anxiety and ease demand for purchases, partially stabilizing the housing market (5th meeting)."

At the 6th meeting held last week, the government even expressed unprecedented confidence in the market situation, stating that "housing prices have stabilized and the pace of price increases has slowed." Deputy Prime Minister Hong went as far as presenting specific actual transaction price cases and mentioned the possibility of a housing price decline, which drew heavy criticism from public opinion. Eventually, he had to post a clarification on social networking services (SNS) regarding the accuracy of his remarks.

The government’s diagnosis of housing prices may be right or wrong. However, it is premature to mention stability based on housing price trends over just a week or two. Above all, the fact that the Deputy Prime Minister himself attends weekly meetings to inspect housing prices does not appear normal.

The major policies disclosed by the government through the six meetings also raise doubts about whether it is worth interrupting busy schedules to hold these meetings. Most of the policies are within the routine duties of each ministry. Even the pre-sale subscription schedule announced at the 6th meeting is a routine task of the Ministry of Land, Infrastructure and Transport. This is something that does not require multiple ministries to rack their brains together.

Our economy is in crisis. There are pressing issues that need urgent attention besides housing prices. What could be so important?

The words of a private research institute official I recently met for work come to mind: "Housing prices? They go up when they are supposed to and go down when they are supposed to." "Supply? If there is too much, it won’t be built; if there is a shortage, it will be built." At first glance, these may sound irresponsible, but they precisely capture how the market operates. The market works surprisingly well. It is worth reflecting on whether excessive government intervention is only increasing market volatility. Too much is as bad as too little!