Real Estate PF Heads to National Assembly... Authorities "Striving for an Orderly Soft Landing"

National Assembly Political Affairs Committee Full Meeting Held
Kim Juhyun "Efforts to Prevent Domino Effect"
Lee Bokhyun "Resolving PF with Principles"

Financial Services Commission Chairman Kim Ju-hyun and Financial Supervisory Service Chairman Lee Bok-hyun are taking an oath at the Political Affairs Committee held at the National Assembly on the 29th. Photo by Kim Hyun-min kimhyun81@

The financial authorities stated that they are making efforts for an orderly soft landing of the real estate project financing (PF) market, which has raised concerns due to the Taeyoung Construction workout crisis.

On the 29th, at the National Assembly's Finance and Economy Committee plenary session, Financial Services Commission Chairman Kim Joo-hyun responded to a question from independent lawmaker Yang Jeong-sook, saying, "We are trying for an orderly soft landing, but if it doesn't work, it will burst," and added, "We are working to prevent a domino effect that would cause everything to collapse."

He emphasized that the real estate PF market will be guided to a soft landing through the normalization and restructuring of PF projects. He said, "One axis is the Ministry of Land, Infrastructure and Transport providing tax benefits for unsold properties in local areas to improve the viability of PF projects, and the other axis is the financial authorities managing 85 trillion won in funds to normalize viable projects and induce restructuring for problematic ones."

He added, "Real estate PF was created during an era of low interest rates and soaring real estate prices when people borrowed to invest in real estate, but now, with rising interest rates and inflation, it inevitably faces difficulties."

Additionally, Financial Supervisory Service Governor Lee Bok-hyun expressed his belief that an orderly soft landing is possible if PF is managed with principles.

Governor Lee said, "The reason I refrained from confidently saying that PF should be resolved at the end of 2022 or last year was because I felt the market foundation was weak, and the indicators also showed that. Considering the timing as well, I believe that if PF is resolved with principles, an orderly soft landing is possible, and we are working in that direction."