"Even Big Companies Can Fail," "Continued Downward Stabilization of Housing Prices" - Words from Won Hee-ryong

Ministry of Land, Infrastructure and Transport National Audit Examined Through Key Ministerial Remarks

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.

Won Hee-ryong, Minister of Land, Infrastructure and Transport, underwent a national audit as a cabinet member for the first time. The audit, which started at 10 a.m., ended past midnight after more than 12 hours. Various issues such as housing supply, Yongsan Park, construction safety, tax relief, and road and railway transportation sparked heated debates, leaving not only the respondents but also the lawmakers visibly fatigued at times. Let’s revisit the 2022 national audit of the Ministry of Land, Infrastructure and Transport through Minister Won’s key remarks, which was long, noisy, and occasionally filled with laughter.

"Housing prices are too high... a prolonged period of downward stabilization is necessary"

The public’s anger over the skyrocketing housing prices became a catalyst for regime change. Considering this, Minister Won made somewhat dry remarks about the recent housing market situation.

Regarding the recent real estate market, he said, "Prices are too high, so a prolonged period of downward stabilization is necessary." However, he also stated, "The government should only manage the side effects caused by a hard landing."

According to a survey by the Korea Real Estate Board, apartment prices in Seoul fell by 0.20% in the first week of October. This is the largest drop in 9 years and 10 months since December 3, 2012 (-0.21%).

"Should the government bear all the risks of ‘empty-can jeonse’?"

He expressed a similar stance regarding the issue of ‘empty-can jeonse,’ where the deposit exceeds the market price.

He said, "The problem of empty-can jeonse caused by reckless gap investment is a difficult issue," but added, "We will implement support measures such as financial grace or easing to prevent a rapid and violent adjustment process. However, we must be very cautious about whether we should bear all the consequences of past reckless jeonse loans and multi-homeowners’ gap investments."

He continued, "We will devise support measures to prevent a hard landing and work on structural normalization to prevent such incidents in the long term."

'Parental support chance' is not a target for support or relief at all

Minister Won stated, "Cases where parents’ assets are gifted or inherited, or where parents purchased homes in their children’s names during a period of rising real estate prices, are not considered targets 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, income, assets, and eligibility."

Photo by Asia Economy

"Moon administration’s official price roadmap is idealistic and excessive policy"

Minister Won announced plans to revise the real estate official price realization roadmap pursued by the Moon Jae-in administration.

He said, "Common sense tells us that market prices always fluctuate, so aiming to set official prices at 90-100% of market prices at all times is an excessive idea." He added, "Even if a margin of error is allowed, there would be many problems. The realization rate under the Moon administration was idealistic and an excessive, government-centric policy."

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

However, due to the rapid rise in real estate prices, official prices also surged, leading to complaints that tax burdens on multi-homeowners and even single-homeowners became excessively heavy.

"Considering raising the 1.8% interest rate on subscription savings accounts... raising minimum housing standards"

Changes are also expected in the interest rate on subscription savings accounts and minimum housing standards. In response to a question about whether the current 1.8% annual interest rate on housing subscription savings accounts should be raised, Minister Won replied, "We are considering raising it." The interest rate on housing subscription savings accounts 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㎡."

Regarding the creation of Yongsan Park, there was a heated exchange. The opposition party questioned, "Is it appropriate to invest over 40 billion won in the park’s opening when the pollution cleanup is not yet complete?" Minister Won responded, "We are doing our best to implement pollution prevention measures."

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

"HDC Hyundai Development Company could go bankrupt if it doesn’t do things properly"

Additionally, Minister Won issued a de facto public warning to construction companies, urging them to take responsible attitudes regarding construction site safety.

Regarding the collapse accident at Gwangju Hwajeong I-Park, he said, "It is a big mistake to think that this will be handled lightly and passed over," emphasizing, "It is necessary to demonstrate compensation and support for the victims and prevention of recurrence through actions."

He warned, "Assuming that big companies won’t go bankrupt could lead to serious trouble."

All-out effort for housing stability... expanding urban supply and rental housing through deregulation

During the report on the Ministry of Land, Infrastructure and Transport’s major business progress, Minister Won first made it clear that "we will devote all efforts to housing stability for the people," emphasizing that housing stability is the top policy priority.

To ensure housing stability, he stressed, "We will rationally improve regulations so that quality housing can be supplied quickly within urban areas and expand the supply of affordable public rental housing."

Although the opposition criticized the current government’s easing of taxes on multi-homeowners and deregulation of reconstruction as a "government for the rich," Minister Won countered, "This is a process of normalizing excessive regulations introduced during a period of rapid price increases."

He emphasized, "The easing of reconstruction regulations is to normalize supply among the complex factors affecting housing prices, and tax relief is to normalize taxes on single-homeowners."