[Reporter’s Notebook] Lee Jaemyung-Style Real Estate Policy: Ultimately "Moon Jae-in Season 2"

Structural Reforms Like Easing the Reconstruction Excess Profit Recovery and Multiple Homeowner Regulations Are Missing
Public-Led, Direct Implementation by LH... Essentially the Same as the Moon Jae-in February 4 Measures
Immediate Regulatory Tightening for the Market, Effectiveness Remains Uncertain
Appointment of "Henry George School" Figures Signals a True "Moon Jae-in Season 2"

The government has announced a plan called the "Housing Supply Expansion Initiative," pledging to begin construction on 1.35 million housing units in the Seoul metropolitan area by 2030. This is the first time such a specific figure has appeared, even though it was not included in the presidential campaign pledges. However, the market response has been cold, with some people cynically remarking, "I'm glad I bought a house in advance."

While the government has promoted revitalizing redevelopment projects, it has failed to address the core issue-boosting supply in the most desirable areas, which are the epicenter of the "one smart property" trend. There was not even a mention of abolishing or revising the reconstruction excess profit recovery system, despite repeated calls from experts. Instead, the plan only included vague ideas such as utilizing old government buildings and school sites. The construction industry’s long-standing demand for easing regulations on owners of multiple homes was not addressed at all in the 52-page policy document.

As a result, critics argue that this is nothing more than a "supply show" that ignores the reality that the private sector is responsible for more than 80% of all housing supply, while listing only public-led projects. This policy is essentially no different from the Moon Jae-in administration's February 4, 2021 measures. Even the incentives for higher floor area ratios and the slogans for speeding up redevelopment and reconstruction have been copied verbatim. Many of those previous measures were never implemented and quietly disappeared. This time, the only changes are the focus on managing "construction start" as a benchmark and the packaging of direct implementation by Korea Land and Housing Corporation (LH).

This outcome was already anticipated. Even before the announcement, experts at policy meetings criticized the plan, saying, "There will be little in terms of supply, so at least introduce demand suppression measures." Ultimately, after a string of empty supply promises, what returned was more regulation. The government lowered the loan-to-value (LTV) ratio in regulated areas from 50% to 40%. However, since the June 27 measures had already capped mortgage loans at 600 million won, and since the new rule applies only to ultra-high-priced areas such as the three Gangnam districts and Yongsan, its impact is minimal. Lee Sangkyung, the First Vice Minister of Land, Infrastructure and Transport, also hinted that this move was essentially a step toward expanding regulated areas. On top of this, the government introduced a "targeted regulation" limiting the jeonse loan cap for owners of a single home to 200 million won. While supply is a promise for the future, the market is being hit with immediate regulatory tightening.

Ultimately, the core issue is people. Key policy positions, including the First Vice Minister of Land, Infrastructure and Transport and the head of the LH Reform Committee, are held by individuals whose beliefs closely align with the radical theorist Henry George, who advocated for the state to recover 100% of unearned land income. The specter of the past, which viewed land and home ownership as a sin and sought to suppress the market, is returning.

Both policy and personnel appointments represent not just a "Moon Jae-in Season 2," but a complete return to the past. Market experts are aware of this, but are reluctant to speak out publicly at the start of a new administration to avoid confrontation. Still, someone must speak the uncomfortable truth. While the government claims to pursue market stability, it is fighting against the market. While it promises to ease the public's suffering, it is instead foreshadowing even greater hardship. Everyone already knows what the outcome will be.