[Initial Report] 'War on Real Estate Crime Season 2'... History Repeats Itself

[Asia Economy Reporter Jo Gang-wook] The American drama "Friends," which depicts the lives of three men and three women in their 20s and 30s living in New York, is a famous sitcom that aired in seasons from 1994 to 2004 for a full 10 years. In Korea, it became a hot topic again because BTS's RM reportedly learned English through this drama. While seasonal formats are common in American dramas, it has been generally assessed that successful establishment of such formats is difficult in Korea due to different production environments and conditions. However, recently there has been an issue gaining attention in Korea as Season 2 has started. This is the so-called "War on Real Estate Crime Season 2," led by the current government.

Just two months after taking office, in July 2017, President Moon Jae-in told government officials, "If you can control real estate prices, I will treat you to a pizza each." This was an official declaration of the government's strong will to "control housing prices," one of the biggest goals held since the beginning of the current administration. Furthermore, in last year's New Year's address, the term "war" was even used to express the determination to eradicate real estate speculation. However, the government stumbled upon a major obstacle with the Korea Land and Housing Corporation (LH) speculation scandal and has once again declared war on real estate crime. They are pleading to restore public trust through ultra-strong regulations such as registering all public officials' real estate assets and establishing an organization to oversee real estate transactions and illegal speculation.

Since the launch of the current government, real estate policy has been entirely focused on "regulation." The solution was to regulate multi-homeowners and speculative forces. Measures such as blocking loans and imposing tax bombs reflected the underlying perception that buying a house equates to "speculation." Nevertheless, when the upward trend in housing prices did not stop, the government blamed the previous administration and officially stated that supply was sufficient. However, while the government was waging war on speculation, housing prices continued to rise. In fact, the Citizens' Coalition for Economic Justice (CCEJ), which played a role as a talent incubator for the current government, criticized last month that despite 25 real estate measures over four years since the Moon Jae-in administration began, Seoul apartment prices rose by as much as 500 million won (78%) per unit.

Looking back, during the previous Roh Moo-hyun administration, strong real estate regulations were also implemented nine times from 2003 to 2007 to stabilize housing for ordinary citizens by cracking down on speculators. These included expanding speculative overheated districts, implementing a reconstruction excess profit recovery system, introducing comprehensive real estate tax, designating housing transaction reporting areas, and strengthening capital gains tax on multi-homeowners. However, the market was not controlled, and Seoul apartment prices rose by more than 56% over the five years of the Roh administration. Ultimately, the balloon effect of real estate regulations occurred, causing a sharp rise in Seoul apartment prices and intensifying regional polarization. Does this not resemble the current situation? However, former President Roh Moo-hyun could not overcome the worsening public sentiment caused by the real estate price surge and had to hand over power to former President Lee Myung-bak.

Throughout history, there have been countless cases where governments controlled prices and regulated markets supposedly for the people's benefit. All ended in failure, yet the same mistakes are repeated like a "deja vu." Is it arrogance that they close their ears to the voices of the people and believe they will succeed if they do it themselves? President Moon said in his March 1st Independence Movement Day speech this year, "We must face the history of the past squarely and learn lessons." Where have the lessons he learned from past real estate policies gone? The evaluation of the current government now has only one year left.