Hong Nam-ki Warns Again About 'Panic Buying'... But When Government Says 'Peak', House Prices Rise Further

Public Address to the Nation on Stabilizing the Real Estate Market

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance (left), and Noh Hyung-wook, Minister of Land, Infrastructure and Transport, are attending a joint briefing of real estate-related government ministries held at the briefing room of the Government Seoul Office Building on July 28, 2021. Photo by Yonhap News.

[Sejong=Asia Economy Reporter Son Seon-hee] Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki held a public address on real estate and warned against panic buying. He once again raised the ‘housing price peak’ card as a warning, which is interpreted as an appeal to the public after various measures failed to take effect. Requests to refrain from panic buying have been made five times in the past two months, but despite this, apartment sale and jeonse prices in 17 cities and provinces nationwide have steadily risen. Deputy Prime Minister Hong stated that housing supply will be set as the top priority.

On the 28th, at the Government Seoul Office, Hong Nam-ki said in his remarks titled ‘A Message to the Public for Stabilizing the Real Estate Market,’ "In the past, right after the foreign exchange crisis and the global financial crisis, housing prices such as Seoul apartments underwent significant price adjustments, and recently, indicators measuring the level and appropriateness of housing prices have approached or already exceeded their highest levels."

Hong Nam-ki bowed his head and said, "I feel sorry that housing and jeonse prices have shown unstable signs again mainly in the metropolitan area since last April," but emphasized, "This year’s move-in volume is 460,000 units and 83,000 units respectively, maintaining the average level, so there is no shortage of supply."

Deputy Prime Minister Hong’s remarks placed more weight on panic buying being a bigger problem than supply measures. However, the possibility that such a ‘threat’ will work is not high. This is the fifth time since the expanded Ministry of Economy and Finance meeting on May 24 that Hong has mentioned ‘real estate price adjustment.’ According to the weekly apartment sale and jeonse price indices announced by the Korea Real Estate Board, since then, the sale price index has risen by 2.1 percentage points nationwide and 1.1 percentage points in Seoul (from May 24 to July 19). The jeonse price index also increased by 1.3 percentage points nationwide and 0.8 percentage points in Seoul.

However, Hong also mentioned plans to strengthen supply. He said, "We will faithfully implement the existing housing supply plan and advance the supply schedule by even one 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 was present at the event, said, "To maximize the market stabilization effect through pre-sale, we will actively promote expanding pre-sale, which is currently applied only to Korea Land and Housing Corporation (LH) public housing sales, to public land private housing and 3080 urban supply volumes."

Financial Services Commission Chairman Eun Sung-soo stated, "We will suppress asset market investment demand using excessive leverage and thoroughly manage the recently increased household loans in the secondary financial sector."