Yoon Seok-yeol's 'GTX Expansion', Lee Jae-myung's 'Reconstruction Easing'
Concerns Over Housing Price Surge Amid Successive Real Estate Pledges
Hong Nam-ki: "Stability Hard Won Must Not Be Undermined"
Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki is speaking while presiding over the 37th Real Estate Market Inspection Meeting of Related Ministers held at the Government Seoul Office in Jongno-gu, Seoul on the 19th. Photo by Hyunmin Kim kimhyun81@
The government expressed concerns on the 19th that housing prices could be affected by the presidential candidates' real estate pledges ahead of the election, which is interpreted as a determination to further solidify the hard-won stability in the real estate market. Recently, as Lee Jae-myung, the Democratic Party presidential candidate, announced plans to ease reconstruction regulations, and Yoon Seok-youl, the People Power Party candidate, proposed expanding the metropolitan area express railroad (GTX) lines, signs of housing price fluctuations emerged, prompting the government to preemptively block such movements.
Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said at the ‘Real Estate Market Inspection Meeting of Related Ministers’ held at the Government Seoul Office on the morning of the 19th, "Since January, housing prices in some areas have shown signs of being influenced by large-scale development pledges during the election process. The government is monitoring these unusual trends with serious concern."
With the prevailing view that this presidential election will be influenced by so-called ‘real estate public sentiment,’ the government’s expression of concern over major candidates competitively proposing deregulation pledges is interpreted as a kind of warning or brake.
In fact, on the 13th, candidate Lee visited Nowon-gu, Seoul, promising the introduction of a ‘Rapid Consultation System for Redevelopment and Reconstruction’ and the establishment of a ‘Type 4 Residential Area’ that allows a floor area ratio of up to 500%, stating that "redevelopment and reconstruction are important housing supply means within urban areas." Candidate Yoon, at the launch ceremony of the Gyeonggi Province election countermeasures committee on the 12th, announced plans to extend the existing GTX A and C lines to Pyeongtaek, Gyeonggi Province, and to newly establish D, E, and F lines to create a ‘30-minute living zone’ in the metropolitan area. The beneficiary areas of the transportation network expansion include Gimpo, Suwon, Hanam, Incheon in Gyeonggi Province, effectively covering the entire metropolitan area.
Lee Jae-myung, the Democratic Party presidential candidate, is delivering a greeting at the on-site meeting of the virtual asset exchange held on the 19th at Upbit Lounge in Gangnam-gu, Seoul. Photo by the National Assembly Press Photographers Group
Concerns that such pledges could disrupt the hard-won housing price stability are emerging not only from the government but also from the market. Nowon-gu saw apartment prices skyrocket due to deregulation expectations after Seoul Mayor Oh Se-hoon was elected last year, but prices barely turned downward by -0.01% this week. Areas in Gyeonggi Province such as Uiwang, Siheung, and Anyang also experienced ‘record-level’ increases of over 30% in housing prices within a year due to GTX development benefits last year, but have recently shown a downward trend.
Deputy Prime Minister Hong emphasized, "Real estate market stability is a common goal that should be pursued regardless of the ruling or opposition parties, or the current or next government," adding, "It is more important than anything else that everyone works together to prevent the fragile stabilization trend from being damaged."
The government plans to further increase supply to achieve firm stability, as recent buying demand has sharply weakened due to overlapping factors such as loan regulations, interest rate hikes, and the spread of recognition that housing prices have peaked. Minister of Land, Infrastructure and Transport Noh Hyung-wook also emphasized at a press briefing on the 17th, "The atmosphere has changed compared to last year," and "We will ensure that no one says again that housing prices rise due to supply shortages."
Ko Jong-wan, President of the Korea Asset Management Research Institute, suggested, "Easing reconstruction regulations could stimulate jeonse and monthly rent prices, and GTX expansion could be a trigger for housing price increases in the metropolitan area," adding, "While I agree with the candidates’ directions, since housing prices have recently entered a stabilization phase, it is necessary to release pledges only after completing at least minimal analyses of their potential impact on housing price trends and the costs involved."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
