Minister of Land, Infrastructure and Transport Park Sang-woo Appears on KBS Sunday Diagnosis
"House Prices Unlikely to Shift to a Trend of Rising"
Park Sang-woo, Minister of Land, Infrastructure and Transport, stated on the 9th that the comprehensive real estate tax should be abolished. He also expressed the position that the excess profit recovery system for reconstruction and the two rental laws (contract renewal request right and rent ceiling system) should be eliminated. He forecasted that it would be difficult for housing prices to shift to a trend of sustained increase.
Minister Park appeared on KBS Sunday Diagnosis that morning and said, "I support the abolition of the comprehensive real estate tax," adding, "The comprehensive real estate tax is a punitive tax designed to prevent excessive real estate profits, which does not align with the principles of taxation."
He pointed out, "If there is income, income tax and capital gains tax are paid, and property tax is paid according to the price of the item so that local governments can utilize it. However, the past government created the national comprehensive real estate tax and used it like a wealth tax."
Regarding the excess profit recovery system for reconstruction, he said, "It is a system created to prevent reconstruction," and added, "The government's stance is that it is now time to proceed with reconstruction, and if possible, to even support it, so abolishing it is the right course."
Minister Park reiterated that the government's and ruling party's stance on the two rental laws is abolition, saying, "It may not be easy to gain opposition party consent, but we will continue to raise the issue."
Above all, he said the contract renewal request right, which guarantees up to four years of residence by extending the lease contract to '2+2 years,' should be abolished and restored to a two-year contract basis. He argued, "It is difficult to analyze that the two rental laws caused the rent prices to rise, but it is clear that they have the side effect of making prices rise more when they do."
"Causes of Rent Price Increase: Jeonse Fraud and Two Rental Laws"
Regarding the current jeonse market, he said, "Jeonse prices are at about 85% of their peak average," adding, "Not all areas have risen uniformly; there are regional differences." He noted that jeonse prices have risen consecutively for 55 weeks, with a total increase of 5.4%. During the previous 68-week decline period, prices dropped by 19%, so about one-third has been recovered.
He pointed to jeonse fraud and the two rental laws as causes of the rent price increase. Minister Park said, "People looking for villas are moving to apartments, which are relatively stable and have verifiable market prices, causing apartment jeonse prices to strengthen," and "Jeonse prices have risen in areas where transportation networks have improved."
He also diagnosed, "Due to the two rental laws, contracts are effectively for four years, so landlords are definitely reflecting four years' worth of rent in advance," adding, "In effect, the market volatility has increased with four-year contracts."
Minister Park described the current housing price situation as "overall stable," noting, "Housing prices in provincial areas are still falling, but areas with good transportation in the metropolitan area and popular regions have turned to an upward trend."
He continued, "The economic outlook is uncertain, construction costs have risen leading to high sale prices, and from the second half of next year, apartments in the 3rd new towns will be supplied," concluding, "Considering various factors, it is difficult for housing prices to shift to a trend of sustained increase."
Minister Park said, "It is not a situation where gap investment or short-term investment can be recklessly entered," and forecasted, "Although there is a global expectation for further easing of high interest rates in the second half, interest rates remain a significant burden, so the sales market is expected to remain stable."
"If Jeonse Fraud Housing Auction Profits Are Utilized, Actual Damage Compensation Is Possible"
Minister of Land, Infrastructure and Transport Park Sang-woo is giving a briefing on the request for reconsideration of the amendment to the Jeonse Fraud Victims Act at the Government Seoul Office in Jongno-gu, Seoul on the 29th. Photo by Jo Yong-jun jun21@
Regarding measures against jeonse fraud, victims are demanding the option to choose between the opposition party's 'prior relief, later recovery' plan and the government's 'support using auction profits from victim housing' plan. Minister Park stated that it is practically impossible, saying, "(The two plans) are very difficult to coexist legally and technically."
The special law amendment for jeonse fraud victim support, which included the 'prior relief, later recovery' plan, was proposed in the 21st National Assembly and passed, but was discarded after President Yoon Seok-yeol exercised his veto and the 21st National Assembly ended.
Minister Park said, "There has been political controversy over strengthening direct support for jeonse fraud victims, with the opposition party passing the bill alone and requesting reconsideration, which was a recent incident," adding, "Listening to the opposition's statements, it feels like this issue is being treated as a political slogan."
He explained, "The government plan ensures housing stability by allowing victims to continue living stably in their homes for 10 years through the auction process."
Minister Park said, "Nowadays, auction success rates sometimes fall below 50%, which means the amount of support available increases, so using the government plan can actually provide real damage compensation," and added, "We have been explaining this plan to victims multiple times."
He concluded, "The government will strive to quickly create a consensus that is acceptable to both the government and the opposition party as well as the victims."
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