[Market Pulse] Proposal to Establish a National Housing Policy Committee

Recent changes in the housing market have once again become a source of public concern. The Lee Jaemyung administration clearly outlined its housing policy direction-curbing speculative housing demand and ensuring the public nature of housing supply-through demand-suppression measures announced on June 27 and supply-expansion measures on September 7. However, these efforts failed to dominate the housing market.

Why is this the case? The core issue lies in the unearned income generated from housing. For Millennials & Gen Z, who are driving housing demand, purchasing an apartment in Seoul is simply another form of investment, akin to investing in stocks or cryptocurrency. If there is a shortage of apartment supply leading to rising housing prices, and if there is an expectation that the government will not effectively recoup the unearned income from housing investment and ownership, these generations will invest boldly.

In fact, the Lee Jaemyung administration showed a willingness to pursue a policy direction that responds to housing demand and the market, emphasizing 'pragmatism' rather than confrontation with the housing market. The administration did not bring tax and regulatory measures for recouping unearned income to the forefront, nor did it abolish the housing market revitalization measures announced during the sharp price decline in 2022-2023. Astute market participants picked up on these signals and drove increased demand and rising housing prices.

When housing policy is viewed as a political issue, it becomes difficult to adopt any measures that reduce unearned income from housing. Increasing the tax burden, strengthening regulations related to redevelopment projects, or adopting public development methods that allow the government to monopolize development profits are all unpopular. Globally, as governments alternate between progressive and conservative administrations, most mechanisms for increasing tax burdens and recouping development profits have been rendered ineffective.

Although these tax and housing welfare policies are unpopular and face strong opposition, they are essential, and require public support as a driving force for implementation. To secure this support, public debate must be conducted from the policy planning stage. There must be intense social discussion and national consensus on the fundamental nature of current housing policy and what alternatives are possible. In fact, key national policy decisions-such as the Roh Moo-hyun administration's August 31 real estate measures and the Moon Jae-in administration's suspension of nuclear power plant construction-were implemented through public debate procedures.

If we are to distinguish between short-term market response policies and the long-term vision and strategy for housing policy, there must be a fundamental overhaul of the current decision-making bodies and governance structures. First, the entities responsible for formulating and deciding short-term, market-responsive housing policies must be clearly designated. If the Presidential Office oversees policy, uncontrollable fluctuations in housing prices can become a burden as a key indicator of government performance. The Ministry of Land, Infrastructure and Transport is the main department for housing policy, but it cannot control interest rates, liquidity, or tax policies, all of which affect housing prices. While the Economic Ministers' Meeting, led by the Ministry of Economy and Finance, is the main decision-making body for housing policy, today's housing policy must be addressed in close connection with regional balanced development, welfare and care, and the work of local governments, beyond just economic ministries. It is desirable for the Office for Government Policy Coordination to play the role of coordinating and deciding housing policy at the inter-ministerial level.

As an independent governance body to embody the principles and national consensus for long-term housing policy, I propose establishing the National Housing Policy Committee under the Office for Government Policy Coordination. Just as the National Education Committee sets the mid- to long-term vision for education, the National Housing Policy Committee should be an inter-ministerial governance body that deliberates and reaches consensus on housing issues, which have a significant impact on the national economy and the quality of life for citizens.

Byun Changheum, Professor of Public Administration at Sejong University