[Death of No Tae-woo] "Housing Price Stability" Takes Direct Action, Introduces 2 Million Houses and Land Public Concept

Housing Price Surge in the 1980s with 2 Million Housing Units Flood
Progressive Governments' Frequent 'Land Public Concept' Also Actively Introduced First
Criticism of Poor Construction and Market Distortion Due to Speed Race and Land Public Concept

Apartments in downtown Seoul as seen from Namsan, Seoul

In 2021, when the average apartment price in Seoul surpassed 1.2 billion KRW and the neologism "byeorakgeoji" (sudden pauper) was coined, the real estate policies of the Roh Tae-woo administration were recalled as a major example of stabilizing housing prices. It is evaluated that the administration achieved housing price stability by supplying 2 million housing units and promoted permanent stability in the real estate market by introducing the concept of public land ownership.

◆Housing Supply Bomb of 2 Million Units... Curbing Gangnam Housing Prices

The late 1980s, when the Roh Tae-woo government came to power, was a period of the "three lows boom" (low dollar, low interest rates, low oil prices), which greatly increased liquidity in the market, overheating the real estate and stock markets.

As housing prices skyrocketed and public opinion worsened mainly in Seoul, former President Roh announced a plan in 1989 to supply 2 million housing units, including five new towns such as Bundang and Ilsan. This accounted for nearly 20% of the total housing supply at the time. It was the "largest civil engineering project since Dangun" and marked the beginning of the full-scale apartment era.

As apartment supply gradually increased, the soaring trend calmed down. From 1991 to 2000, housing prices showed a downward stabilization trend for ten years. Experts evaluated that "Bundang held down Gangnam housing prices for more than 10 years," and the Ministry of Construction and Transportation also stated in 2002 that "housing prices reversed to a downward trend starting from 1991, when housing supply began."

The Moon Jae-in administration and the ruling party, which issued multiple supply measures, also frequently cited the Roh Tae-woo administration's supply policy, saying, "After stabilizing housing prices with the supply of 2 million units during the Roh Tae-woo government in 1990, the largest supply measures in 31 years have been announced."

Former President Roh Tae-woo

◆Rolling Up Sleeves to Introduce 'Public Land Ownership Concept' for Structural Housing Stability

Former President Roh was also well known for actively advocating the introduction of the "public land ownership concept." Generally, this concept is often brought up by progressive governments, but Roh saw it as necessary for long-term housing stability.

From his first year in office, on September 2, 1988, during a Blue House Cabinet meeting speech, he said, "I hope you actively consider expanding the introduction of the public land ownership system within the scope that does not infringe on the people's property rights." The following year, the so-called "three laws on public land ownership" were established: the Land Excess Profit Tax, the Development Gain Recovery System, and the Land Ownership Limit System.

If land prices rose due to external factors beyond the owner's efforts, the unearned income was reclaimed through taxation, and profits gained from development were also reclaimed by the state. Individuals and corporations seeking to acquire land exceeding 661.15㎡ (200 pyeong) per household had to obtain permission or report to the mayor or county governor.

These systems did not last long. The Constitutional Court ruled the Land Excess Profit Tax law unconstitutional in 1994 and the Land Ownership Limit law unconstitutional in 1999.

However, as real estate prices repeatedly surged, undermining housing stability and causing adverse effects across the socio-economic spectrum, the public land ownership concept was frequently invoked regardless of the government in power.

The "Comprehensive Real Estate Holding Tax" and "Excess Profit Recovery System for Reconstruction," which emerged during the Roh Moo-hyun administration, were based on the public land ownership concept. The Moon Jae-in administration also sought to enshrine the concept in constitutional amendments, and whenever scandals like the Korea Land and Housing Corporation (LH) speculation incident arose, ruling party figures emphasized the need to revive the public land ownership concept.

Former President Roh Tae-woo, who served as the 13th President of the Republic of Korea, passed away on the 26th. The photo shows General Roh Tae-woo at the 1981 retirement ceremony as Commander of the Defense Security Command.

◆Speed-Driven 2 Million Units Led to Poor Construction... Public Land Ownership Concept Criticized for Market Distortion

Although the goal of stabilizing housing prices was achieved, the Roh Tae-woo administration's real estate policies caused various side effects and faced strong criticism.

Due to the speed-driven supply, a large volume of construction started in a short period, causing disruptions in the market for building materials such as sand, cement, and rebar. In the case of sand, which was crucial for supply and demand, sea sand was used without proper washing, leading to durability issues. In some areas, completed apartments were demolished and rebuilt.

There were also issues with the completeness of urban functions, such as the city's self-sufficiency declining. The focus on housing supply led to neglect in attracting businesses and employment, and the first-generation new towns were criticized for becoming bedroom communities. With the failure to realize proximity between residence and workplace, bottlenecks occurred during commuting hours between Seoul and the new towns.

Regarding the public land ownership concept, there are criticisms that its hasty introduction distorted the market and only triggered social costs. The Land Excess Profit Tax caused serious social disputes due to taxation on unrealized gains, and the Development Gain Recovery System was criticized for delaying urgent urban development and maintenance projects.