Only 50,000 Subjects in First Survey... Real Estate Measures Hindered by 'Speculation'

Minister of Land, Infrastructure and Transport Byeon Chang-heum is apologizing on the 4th at the Joint Briefing Room of the Government Seoul Office in Jongno-gu, Seoul, regarding the speculation allegations of Korea Land and Housing Corporation (LH) employees in the 3rd New Towns, including Gwangmyeong and Siheung. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Kangwook Cho] As suspicions of real estate speculation involving Korea Land and Housing Corporation (LH) spread widely, the 25th real estate measure of the current government and the first real estate policy of Minister Byeon Chang-heum of the Ministry of Land, Infrastructure and Transport are at risk of losing momentum.

The joint government investigation team, including the Prime Minister's Office and the Ministry of Land, Infrastructure and Transport, has launched a full-scale investigation into land transactions involving tens of thousands of public officials, public institution employees, and their families, which may delay the progress of the project.

Moreover, with growing public distrust and demands for a parliamentary audit from opposition parties, concerns are rising that public housing development projects such as the 3rd New Town may face setbacks.

According to government sources on the 6th, the joint government investigation team, led by the Prime Minister's Office, arrived at the LH headquarters in Jinju around 5 p.m. the previous day and began a full-scale on-site investigation.

The investigation team is composed of personnel from the Public Service Management Office of the Prime Minister's Office and the Audit Office of the Ministry of Land, Infrastructure and Transport. They plan to strictly investigate any inappropriate conduct by LH executives and employees and take stern measures.

Investigations into the Ministry of Land, Infrastructure and Transport also began on the same day. Minister Byeon also announced that he submitted a consent form for the collection of land ownership information.

Minister Byeon explained, "Except for unavoidable circumstances such as business trips, all employees, including myself, have submitted consent forms for the collection of land ownership information," adding, "I plan to sincerely cooperate with the investigation starting with myself."

The problem is that the initial investigation targets number as many as 50,000 people. This includes not only employees of the Ministry of Land, Infrastructure and Transport and LH but also employees and families of local governments.

A government official said, "For local governments, we need to receive accurate family lists, but currently, the total number of investigation targets, including individuals and their families, is estimated to be around 50,000."

The investigation team plans to review land transaction records of public officials and their families next week and announce the results of the first investigation. However, if more people than expected are found to be involved in purchasing land in the 3rd New Town, the scale of the investigation may expand, and referrals for prosecution could increase, potentially escalating the fallout.

If a large number of people are caught, large-scale investigations and public criticism could make it practically impossible to proceed with government housing policies such as the 3rd New Town. In particular, since it is difficult to investigate real estate purchased under false names, delays in the investigation period are also expected.

The opposition parties have already launched offensives demanding a parliamentary audit regarding the land speculation suspicions. However, the ruling party has rejected this, citing the government's full-scale investigation. Nevertheless, petitions demanding a parliamentary audit for "rooting out corruption" have been posted on the Blue House's public petition site, reflecting worsening public opinion on the government's real estate policy failures.

Because of this, some point out that the Moon Jae-in administration, which has been hampered by real estate issues throughout its term, is experiencing a "real estate crisis" until the end of its term. There are even concerns that the investigation area could expand to the entire new town, meaning the administration might be preoccupied with clarifying suspicions for the remainder of its term.

Yang Ji-young, head of R&C Research Institute, said, "Public trust has been broken due to LH corruption," adding, "There will be fierce friction in future negotiations, and ultimately, the advantage of rapid public-led housing supply is likely to be diluted."