Won Hee-ryong: "While House Prices Rise Locally, National Average May Fall Further"

Won Hee-ryong, Minister of Land, Infrastructure and Transport, said regarding future house prices, "It is difficult for prices to fall further in areas with high demand or preference, but on average nationwide, there is a possibility of a slight decline."

Minister of Land, Infrastructure and Transport Won Hee-ryong is answering questions during a meeting with correspondents in Berlin, Germany on the 26th (local time). / Photo by Yonhap News

Minister Won made this assessment at a press conference held on the 26th (local time) in Berlin, Germany, stating, "Opinions are divided on whether house prices will fall once more or if the current level is the bottom."

He said, "Properties that many subsequent buyers are waiting for are either stabilizing at the bottom or may partially rise," but added, "On average, the effect of interest rate hikes lasts a long time, so it is still too early to say that the overall market has turned to a rebound."

He noted that if the supply of high-end real estate does not reach a certain level, house prices could rise locally. He cited areas such as Gangnam-gu in Seoul as examples.

He explained, "In the previous administration, there was criticism that artificially suppressing the entire market to control house prices in areas with concentrated demand actually caused prices to rise further, which was seen as a policy failure," and added, "Rather than artificially controlling house prices, we plan to review factors that could cause partial price increases overall and address them by increasing supply."

Regarding the reform of the Jeonse system, he said there are no plans to introduce escrow (deposit payment escrow) in the second half of this year. Minister Won emphasized, "Escrow is the most extreme response method, but even if we do not go that far, it is time to intervene in the Jeonse system to protect tenants' rights to the return of their deposits." Escrow is a method where tenants deposit their Jeonse deposit with a third party (such as a trust company or guarantee institution), which then holds part of the deposit and pays the remainder to the landlord.

The Ministry of Land, Infrastructure and Transport has commissioned a research project to the Korea Research Institute for Human Settlements regarding the three lease laws and the Jeonse system. Minister Won said, "Since the Jeonse system serves as a stepping stone for home ownership, I do not think it is necessary to forcibly remove parts that tenants prefer," adding, "However, it is necessary to impose restrictions on landlords who hide facts such as senior mortgages or other debt relationships or misuse the deposit."

Meanwhile, Minister Won visited Warsaw, Poland from the 21st to the 23rd to discuss ways to participate in Ukraine's reconstruction. He then attended the International Transport Forum Ministerial Meeting in Leipzig, Germany on the 24th and 25th before visiting Berlin.