[Inside Chodong] Real Estate Touches the 'Sensitive Nerve of Public Sentiment'

[Asia Economy Reporter Ryu Jeong-min] The sale price for the A-type 84㎡ (exclusive area) apartment in Seoul Godeok Gangil Jeil Punggyeongchae, an apartment built in a public housing district, is 899.9 million KRW. As a result of the apartment subscription application on the 3rd, 7,173 people applied for the ‘First-Time Homebuyer Special Supply’ which allocated 32 units.

What is the reason for the ‘huge success’ despite the controversy over the high sale price? It is not unrelated to the perception that one must secure their own home before it is too late. Those who reluctantly applied for the subscription and those who gave up due to financial burdens are unlikely to feel at ease. This is because the ‘crack’ has appeared in the belief that public housing sites would resolve the housing concerns of ordinary citizens.

The real estate issue is the most difficult area of ‘political mathematics.’ Real estate involves a complex mix of numerous interests and demands. Real estate policies that consider the 40-50s generation without homes who have lived without a house for many years can lead to disadvantages for the younger generation and newlyweds.

[Image source=Yonhap News]

If a large-scale apartment supply is possible at once, it might calm the anxiety about real estate. However, due to the nature of real estate, the scenario of announcing a plan today and supplying tomorrow is impossible from the start. For example, even if a large-scale housing district near Seoul is announced, considering the development process, the actual time when consumers can move into apartments is 5 to 10 years later.

Creating a new town is a series of challenges from start to finish. If rumors spread that insiders who obtained development information in advance and their associates have bought land, the problem becomes even more complicated.

The reason public opinion reacts sensitively to such issues is that it is hard to dismiss them as baseless rumors. It is a rational suspicion formed by observing the history of new town development stained with corruption and favoritism. The recent speculation allegations regarding Gwangmyeong Siheung New Town are the same. The public reacted immediately because the issue of real estate fairness touches the ‘people’s nerve center.’

If dissatisfaction surrounding real estate policies exceeds a critical point, the government’s efforts to resolve the issue become meaningless. This means that even if the government investigates real estate speculation allegations and announces the results, the public may still not drop their suspicions.

[Image source=Yonhap News]

A typical solution that can be proposed when allegations of real estate speculation by public institution officials arise is the dismissal of the minister in charge. This approach calms the angry public first and then seeks a way to manage the incident. However, President Moon Jae-in not only did not dismiss Land, Infrastructure and Transport Minister Byeon Chang-heum but also entrusted him with the authority to lead the investigation.

President Moon does not prefer personnel changes for the sake of shifting the situation. This means he avoids using ministers as ‘scapegoats’ to escape political crises. While this may be seen as respecting officials he appointed under normal circumstances, it could be a complacent response in a crisis that determines the fate of the administration.

If the flow of anger surrounding real estate is not controlled, the momentum of state affairs could reach an irrecoverable state. Is the Blue House properly recognizing the seriousness of the situation? Despite President Moon’s message of “rooting out corruption structures,” why has public opinion not shifted? Could this be a signal that the ‘dam of trust’ that the Moon Jae-in administration would suppress real estate speculation is breaking?