[Inside Chodong] The Blue House, Beginning of the 'Real Estate Black Hole'

[Asia Economy Reporter Ryu Jeong-min] Seoul Mayor Oh Se-hoon achieved a 93.4% vote share in the 3rd polling district of Apgujeong-dong, Gangnam-gu, Seoul. Although Gangnam is traditionally a stronghold of conservative parties, recording a vote share exceeding 93% in Seoul is remarkable.

Is this due to criticism over the skyrocketing real estate prices? Rather, it seems more reasonable to view the underlying sentiment of the voters as hope for reconstruction and expectations for rising apartment prices.

The reason real estate is a difficult issue is that various interests are intricately intertwined. Complaints about real estate abound, but it is nearly impossible to present a solution that satisfies everyone. This is why the ruling party tends to be at a disadvantage when real estate becomes a key issue before elections.

Another characteristic of real estate is that value judgments vary depending on perspective. Is there a clear standard to distinguish between real estate ‘speculation’ and ‘investment’?

The view of the Blue House from Namsan, Seoul. Photo by Hyunmin Kim kimhyun81@

The issue of multiple home ownership is similar. For example, suppose someone owns two houses. Are they a real estate speculator? Should they be morally condemned?

Parents might live in another house that the owner does not reside in, or a grown child who has moved out might live there. Due to private family matters that are difficult to disclose, a husband and wife might each own different houses. However, in such cases, public officials’ asset disclosures still record them as owning two houses.

It is dangerous and foolish to view the number of houses owned in terms of good and evil. In this sense, the incident that occurred at the Blue House on December 16, 2019, needs to be revisited. It might even have been the starting point of the ‘election nightmare’ the ruling party experienced in April 2021.

At that time, the Blue House’s Senior Secretary for Public Communication visited the Press Center to deliver a message from the Chief Presidential Secretary. "We recommend that senior public officials at the Blue House who own two or more houses in the metropolitan area dispose of all but one as soon as possible unless there are unavoidable reasons." Although it was framed as a recommendation, the public service community could only interpret it as a mandate.

[Image source=Yonhap News]

The Blue House’s ‘leading by example’ performance immediately hit a wall. The criterion of ‘two or more houses in the metropolitan area’ was strange from the start. When it became known that the Chief Presidential Secretary owned houses in both Seoul and Cheongju, it sparked controversy over ‘double standards.’ Eventually, all two-home owners, regardless of whether they were in the metropolitan area or provinces, became subject to disposal. Two-home owners at the Blue House became restless regardless of the reasons.

As the Blue House launched a campaign to resolve multiple home ownership, it encountered minefields everywhere. Voices of dissatisfaction arose even within the Blue House. At some point, personnel decisions at the Blue House focused more on whether someone owned two houses than on their ability and qualifications. Some people lost their positions due to the multiple home ownership issue, regardless of their work competence.

How did the public perceive this Blue House scene? When the Blue House finally declared ‘zero multiple home owners’ after much turmoil, instead of an ‘echo of admiration,’ cynical reactions followed. There were even rumors that officials were leaving the Blue House because they did not want to sell their houses. The Blue House ended up wasting effort on the wrong target.

Thus, the Blue House fell into a ‘real estate black hole’ and is still struggling to find an exit.