[Desk Column] In 2022, We Still Live in the 'Real Estate Republic'

[Asia Economy Jeong Doohwan, Deputy Director and Head of Construction and Real Estate Department] The beginning of the Year of the Black Tiger (Im In Year, 壬寅年) signifies the loss of effectiveness of the Moon Jae-in administration's real estate policies over the past four and a half years. Although only a few months remain in the term, the Moon administration's real estate policies are effectively on the path to being discarded. Not only opposition party presidential candidates who have consistently opposed the government's regulation-only policies, but even the ruling party candidates have declared a break from the current administration’s real estate policies, labeling them as a ‘failure.’

What is the reason that the Moon Jae-in government, which showed confidence by saying "We are confident in real estate" from the early days of its launch through the mid-term when real estate policy failures continued, now, approaching the end of its term, not only refrains from saying "We are sorry" but even avoids mentioning the word ‘real estate’ altogether?

Various analyses have emerged regarding the fact that despite launching the most policy measures among past governments, the administration received a near-disastrous report card. Fundamentally, it was because the government was blinded and deafened to the market’s consistent criticism and calls for course correction, trapped in a confirmation bias of ‘I am absolutely right.’

This is clearly reflected in the factors the government pointed to as causes of rising housing prices. As prices soared despite successive measures, the government shifted blame from multi-homeowners to ‘rental business operators,’ ‘bad landlords,’ ‘young buyers who borrowed heavily (Yeongkkeuljok),’ ‘supply shortage,’ and finally to ‘interest rates.’

The problem is that each of these listed causes is indeed part of the answer. With supply completely blocked, not only the real demand who must buy homes immediately but also the overflowing investment demand in the market joined the real estate market, along with the fearful younger generation, creating an upward spiral. Nevertheless, the government responded as if there was only one answer at a time with patchwork measures, so failure was a predictable outcome.

Of course, recently, some areas such as the outskirts of the Seoul metropolitan area and parts of northern Seoul including Gangbuk and Dobong-gu have recorded negative price changes, showing some signs of stabilization. However, no citizen nods in agreement when government officials boast that "housing price declines are inevitable" and praise this as a policy achievement.

Ultimately, the people who still had some hope ‘just in case’ at the beginning of the government in 2017 are still living in a ‘Real Estate Republic’ today in 2022.

In March, real estate policy will face a new turning point. Including leading presidential candidates from both ruling and opposition parties, candidates are each presenting a plethora of real estate pledges, promising not to repeat the current government’s failures. Lee Jae-myung, the Democratic Party presidential candidate, has even proposed a bold pledge to temporarily ease tax burdens to open an exit for multi-homeowners and drastically loosen excessive regulations that block supply. Yoon Seok-youl, the People Power Party candidate, has pledged to ease reconstruction and redevelopment regulations that block supply in urban centers, the epicenter of housing prices. Although lacking in specifics, revolutionary supply expansion is also on the pledge menu across party lines.

However, real estate issues are a complex polynomial equation that cannot be solved simply. If each candidate’s pledge could have been the answer, the problem would have been solved from the start.

I dare to offer advice to the presidential candidates running for the top office in just over three months. Please open your closed ears wide and open your eyes fully. What if it’s from the opposition or a losing candidate’s pledge? Even if you borrow some ideas, it wouldn’t be copyright infringement; sharing the merits of policies is the way forward. This could also be an opportunity for real estate to shed the shackles of ‘politics’ and return to the realm of ‘economics.’ I hope the new year will at least be the inaugural year in which the virtue of ‘cooperation’ is demonstrated, with both ruling and opposition parties putting their heads together on real estate policy.

This content was produced with the assistance of AI translation services.