Hong Nam-ki Issues 5th Warning on 'Housing Price Peak'... Market Unresponsive

Joint Briefing by Ministers Related to Real Estate

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is delivering a joint briefing of government ministries related to real estate and making a "Message to the People" at the briefing room of the Government Seoul Office Building on the 28th.
From the left, Eun Sung-soo, Chairman of the Financial Services Commission; Hong Nam-ki, Deputy Prime Minister; Noh Hyung-wook, Minister of Land, Infrastructure and Transport; Kim Chang-ryong, Commissioner of the National Police Agency. 2021.7.28 [Image source=Yonhap News]

[Sejong=Asia Economy Reporter Son Seon-hee] The government has once again played the 'housing price peak' card, issuing baseless warnings. This is already the fifth time in just the past two months. However, defying these warnings, apartment sale and jeonse prices in 17 cities and provinces nationwide have steadily risen recently. In particular, the Seoul metropolitan area has even shown signs of an expanding rate of increase. This means the government's 'fear marketing' no longer works.

On the morning of the 28th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, held a joint briefing with related agencies at the Government Complex Seoul under the theme "A Message to the Public for Real Estate Market Stability," and apologized, saying, "I, along with other related ministers, sincerely regret that housing prices and jeonse prices, which had been stabilizing with difficulty earlier this year, have shown signs of instability again centered on the Seoul metropolitan area since April."

Although Deputy Prime Minister Hong bowed his head at the beginning of the briefing, seemingly aware of the criticism so far, he said, "I have spoken about the possibility of future housing price adjustments on several occasions, but this was not based simply on intuition, but on past experience and what key related indicators have shown." He continued, "After the past foreign exchange crisis and the global financial crisis, housing prices such as Seoul apartments underwent significant price adjustments, and currently, indicators measuring housing price levels and appropriateness?such as real apartment prices, housing purchase burden index, and price-to-income ratio?are approaching or have already exceeded their highest levels," reiterating previous claims.

This is the fifth time Deputy Prime Minister Hong has mentioned 'real estate price adjustments' since the Ministry of Economy and Finance's expanded executive meeting on May 24. According to the weekly apartment sale and jeonse price indices announced by the Korea Real Estate Board, since Deputy Prime Minister Hong's remarks, the sale price index has risen by 2.1 percentage points nationwide and 1.1 percentage points in Seoul (based on May 24 to July 19). The jeonse price index also increased by 1.3 percentage points nationwide and 0.8 percentage points in Seoul.

Instead of announcing new measures on this day, the government reaffirmed its intention to strengthen existing policies. Deputy Prime Minister Hong said, "We will faithfully implement the existing housing supply plans and further advance the supply schedule by even a single day," adding, "We will keep all possibilities open and actively consider various measures to secure additional land sites." Minister of Land, Infrastructure and Transport Noh Hyung-wook, who joined the joint briefing, stated, "We will finalize and announce specific (supply) plans, including alternative sites for the Gwacheon government complex and Taereung Country Club, by next month."

Regarding concerns about financial market instability due to excessive loans amid the possibility of interest rate hikes in the second half of the year, Eun Sung-soo, Chairman of the Financial Services Commission, said, "We will suppress asset market investment demand using excessive leverage and thoroughly manage the recently increased household loans in the secondary financial sector."