[2022 National Audit] Won Hee-ryong "Continued Downward Stabilization of House Prices... Official Property Prices Undergoing Surgery"

Ministry of Land, Infrastructure and Transport National Audit
"House Prices Too High... Need to Maintain Downward Stabilization"
"Considering Raising Interest Rate on 1.8% Subscription Savings"
"HDC Hyundai Development May Fail if Not Managed Properly"

Minister of Land, Infrastructure and Transport Won Hee-ryong is responding to a lawmaker's question during the National Assembly's Land, Infrastructure and Transport Committee's audit of the Ministry of Land, Infrastructure and Transport held at the National Assembly in Yeouido, Seoul on the 6th.

Minister of Land, Infrastructure and Transport Won Hee-ryong's debut at the National Assembly inspection can be summarized as focusing on 'housing stability' and 'market normalization.' While emphasizing the expansion of urban housing supply and stabilization of the rental market, he reaffirmed his stance on gradually easing regulations that constrain the market, such as the official price realization roadmap and reconstruction safety inspections. Additionally, he engaged in a heated debate over the creation of Yongsan Park and made strong remarks regarding safety issues, stating, "Even large companies can fail."

◆"House prices are too high... Youth benefiting from 'eomppa chance' are not at all subjects for support or relief"

During the report on the Ministry of Land, Infrastructure and Transport's major tasks, Minister Won first made it clear that "we will devote all efforts to ensuring housing stability for the people," emphasizing that housing stability is the top policy priority. To achieve housing stability, he stressed, "We will rationally improve regulations so that high-quality housing can be quickly supplied within urban areas and expand the supply of affordable public rental housing."

Despite criticism from opposition parties labeling the current administration as a "government for the rich" due to tax relief for multi-homeowners and easing of reconstruction regulations, Minister Won countered, saying, "This is a process of normalizing excessive regulations introduced during periods of rapid price surges." He emphasized, "Easing reconstruction regulations is aimed at normalizing supply, which is one of the complex factors affecting house prices, and tax relief is about normalizing taxes for single-homeowners."

Regarding the recent real estate market situation, he stated, "Prices are too high, and a downward stabilization trend needs to be maintained for a considerable period." However, he added, "The government should only manage side effects caused by a hard landing." On the issue of 'empty lease' where rental deposits exceed the market price, he expressed a similar stance. He said, "The empty lease problem caused by reckless gap investment is a difficult issue," adding, "We will implement support measures such as financial grace or easing to prevent a rapid and violent adjustment process, but we must be very cautious about whether we should bear all the consequences of past reckless rental loans and multi-homeowner gap investments." He further stated, "We will devise support measures to prevent a hard landing and work on structural normalization to prevent such incidents in the long term."

Minister Won also said, "Cases where assets are gifted or inherited from parents, or where parents purchased homes in their children's names during a period of rising real estate prices, are not considered subjects for support or relief at all." In response to a question about whether the government's youth cost-price housing could become a second lottery housing, he said, "We will carefully design the program to prevent unfair cases by thoroughly examining economic activity status, income, assets, and eligibility requirements."

◆"Moon administration's official price realization rate was an excessive policy"

Minister Won also announced plans to revise the official real estate price realization roadmap pursued by the Moon Jae-in administration. He said, "Even if a margin of error is allowed, there would still be many problems, but the realization rate under the Moon administration was an idealistic and government-centric excessive policy."

The Moon administration announced the official price realization plan in November 2020, aiming to raise the official prices used as the basis for property tax and comprehensive real estate tax to 90% of market prices by 2030.

However, due to the rapid surge in real estate prices, official prices also skyrocketed, leading to complaints about excessive tax burdens not only on multi-homeowners but also on single-homeowners. Minister Won said, "We have simulated how the complex realization rate scoring table changes according to the standards," adding, "Each option has pros and cons, so policy judgment is necessary, and ultimately, it must be resolved legislatively."

Minister of Land, Infrastructure and Transport Won Hee-ryong is responding to a lawmaker's question during the National Assembly Land, Infrastructure and Transport Committee's audit held on the afternoon of the 6th.

◆"Considering raising the 1.8% subscription savings interest rate... HDC Hyundai Development Company could fail if it does not act properly"

Changes are also expected in the subscription savings interest rate and minimum housing standards. In response to a question about whether the current 1.8% annual interest rate on housing subscription savings should be raised, Minister Won replied, "We are considering an increase." The housing subscription savings interest rate has remained at 1.8% for seven years since 2016. The rate declined annually from 4.0% in 2012 to 3.3% in 2013, 3.0% in 2014, and 2.8% in 2015. Regarding raising the minimum housing standards, he said, "We are actively considering raising it from 17㎡ to 20㎡."

A heated exchange also occurred regarding the creation of Yongsan Park. The opposition questioned, "Is it appropriate to invest over 40 billion KRW in park opening when the pollutant cleanup work is not yet complete?" to which Minister Won responded, "We are doing our best to implement pollution prevention measures."

Furthermore, Minister Won issued what amounted to a public warning to construction companies, urging responsible attitudes regarding construction site safety. Referring to the collapse accident at Gwangju Hwajeong I-Park, he said, "It would be a big mistake to think this will be handled lightly," adding, "It is necessary to demonstrate compensation and support for victims and prevention of recurrence through actions." He warned, "Assuming that large companies will not fail could lead to serious consequences."