Sinking Real Estate Policy... No Captain in Sight

Declining Trust in Public-Led Policies
Absence of a Time-Limited Ministerial Control Tower
Uncertainty Surrounds LH New President Election
Legislative Process Hampered by Political Conflicts
3rd New Town Development Project Also Staggering

[Asia Economy Reporter Kangwook Cho] The real estate speculation by employees of Korea Land and Housing Corporation (LH) has put the momentum of the government's real estate policy at risk of collapse. With Minister of Land, Infrastructure and Transport Byeon Chang-heum's 'conditional resignation postponement' and the prolonged vacancy of the LH president position, the policy command tower has disappeared. Moreover, due to difficulties in investigating financial flows and nominee transactions, a prolonged investigation has become inevitable. Along with the plummeting trust in public-led policies, concerns are growing that not only the second round of new public land site selections but also the 3rd phase new towns may face setbacks. Some voices even warn that the Moon Jae-in administration's real estate policy, with just about a year left in its term, has effectively entered a lame-duck phase due to this incident. ▶Related article on page 3

According to related industries on the 15th, following Minister Byeon's resignation announcement on the 12th, the government's housing supply expansion policy, which was being pushed forward to stabilize the real estate market, has inevitably faced setbacks. Although President Moon stated that "the groundwork for legislation must be completed," the momentum for policy implementation has already been significantly shaken amid loss of trust and leadership vacuum.

The vacancy of the LH president position, who should lead the practical work of the 2·4 measures, is also expected to be prolonged. Initially, Kim Se-yong, president of Seoul Housing and Communities Corporation (SH), was considered a strong candidate, but the Ministry of Land, Infrastructure and Transport decided to re-nominate candidates, and with the ongoing LH organizational restructuring promoted by the government, the selection of a new president remains uncertain. This has resulted in a situation where the heads of both the key government department responsible for real estate policy and the core public corporation are simultaneously vacant.

The follow-up legislative process for the 2·4 measures, including the Public Housing Special Act and the Urban and Residential Environment Improvement Act, has effectively come to a halt. The government had planned to pass the follow-up bills within this month and implement them by revising enforcement ordinances before June. However, these bills were not even submitted at the full meeting of the National Assembly Land, Infrastructure and Transport Committee held on the 12th. Considering the remaining schedule of the committee, it is theoretically impossible for the bills to be submitted within this month.

Furthermore, not only the second round of new public land site selections scheduled for next month but also the already announced five 3rd phase new town development projects, including Hanam Gyo-san and Namyangju Wang-suk, where pre-subscription starts in July, are uncertain to proceed properly. Especially, the 'National Solidarity Council for Public Housing Districts,' composed of landowners from 65 public housing districts nationwide, has demanded a complete cancellation of the 3rd phase new towns, causing the government's policy trust to plummet to rock bottom.

Seo Jin-hyung, president of the Korea Real Estate Society (professor at Gyeongin Women's University), said, "The success or failure of government policy depends on the trust it receives from the public, but currently, due to the LH speculation allegations, trust has been lost, and it seems that the momentum has been somewhat lost."