[In-Depth Review] Housing Stability: Overcoming Dissatisfaction and Distrust Is Crucial

Jin Mi-yoon, Head of LH Housing Stability Research Center

Even one year into the COVID-19 pandemic, the situation remains unpredictable. Concerns over virus variants and resurgent infections make the idea of a ‘post’-COVID era seem increasingly distant. Our daily lives have changed significantly. Staying at home has become the norm, and 3 to 4 out of 10 people work remotely. People are also spending more money at home. From grocery shopping to various household goods, home shopping is the go-to method. For children, home has become both school and playground. Perhaps this reluctant experience of home play, home education, and home working will lead us into an era where remote teleworking becomes the norm. In that case, how safe and suitable is our home for studying, working, caregiving, and long-term living?

The pandemic is not limited to COVID-19 alone; it has also brought about the issue of ‘pandemic housing.’ Social distancing and staying at home have renewed the value of ‘home.’ However, beyond the basic values of safety and comfort, it has led to a pandemic in housing prices.

Yet, the low interest rates and liquidity that have supported housing prices for some time have only strengthened due to the COVID-19 crisis. Manuel Ulber, a professor at Louvain University and author of The Financialization of Housing, stated, "Paradoxically, COVID-19 is driving housing demand as an investment. It is similar to ‘price inflation’ in financial markets during crises." Empirically, during the global financial crisis, some companies bought up large amounts of low-priced real estate and rose to wealth. The OECD has similarly forecasted this financialization trend, where real estate becomes like liquid assets. Even in 2020, when COVID-19 was rampant, the global average housing price rose by 3.3%, with many countries seeing increases of 6-7% or more. There is growing concern about pandemic-driven housing price increases in the future.

Perhaps due to these concerns, topics and policies buried underground 20 to 30 years ago have been resurrected last year and this year. Housing, health, hygiene, and child development have regained attention. It is said that simply providing decent housing improves friendships and school performance, and reduces national healthcare costs. Looking at our situation, the housing market has been barely affected by COVID-19. On the contrary, price instability factors are growing amid rising prices. While diverse real estate discussions and debates for improvement are important, the safety of many homeless and low-income citizens who find it difficult even to stay at home is being ignored, with only real estate public opinion manipulation and policy failure theories being highlighted. Claims that transactions have disappeared due to the three lease laws and that jeonse (long-term deposit leases) will soon vanish have been proven false, but public trust has been severely damaged by policy instability. At least 2 out of 5 private monthly and jeonse rental households have been able to stay in their homes for two more years thanks to this system.

For housing stability, Housing Welfare 2.0 and the 2·4 Plan must be pursued without wavering. However, many problems cannot be solved by supply alone. The key issues are dissatisfaction and distrust. In fact, under COVID-19 conditions, a national strategy to purchase non-residential buildings?which risk price drops and becoming idle spaces?and convert them into residential use is important. Loan regulations and tax systems should focus more on financialized investments. People need to be given the belief that if they wait, affordable and decent homes will soon be available. Yet, despite these plans being implemented, why do dissatisfaction, distrust, and policy instability persist?

Policy success cannot be achieved by a single program. Collaborative leadership and detailed cooperation are more important than ever, and it is hoped that the process of restoring trust in real estate policies will quickly improve policy dissatisfaction and government distrust.

Jin Mi-yoon, Director of the LH Housing Stability Research Center