With the inauguration of the new administration, President-elect Lee has made the expansion of housing supply one of his main pledges. This is because, in the past, when housing prices were soaring, policies that focused on suppressing demand, such as taxation, led to "smart housing" (asset value increase).
The move is based on reflection that the government's focus on "high-end properties" has led to increased polarization of the housing market. The government also pledges to expand supply for middle- and low-income earners.
Lee has pledged to reject the idea of suppressing housing prices through taxes and to expand supply. During his election campaign, Lee visited Seoul's Seocho-gu and Gangnam-gu districts,
"Taxes are difficult to justify when they are used as a means of sanctions for other things," he said. "If housing prices rise due to excess demand, instead of using taxes to suppress demand and control prices, we should increase supply and
In fact, according to the policy pledges of the Democratic Party of Korea, Lee has decided to shift the focus from controlling super-high apartment prices to providing housing for the middle and low-income classes.
He has made clear his plans to focus on housing policies that will allow people to live in a housing stock that meets the needs of the people they serve. He has also promised to provide detailed financial support to homeless people, such as those buying a home for the first time in their lives.
The government also plans to expand special supply for newlywed couples and families with many children. Priority will be given to newlywed couples when supplying public rental housing, and the requirement that newlyweds must have been married for up to 10 years will be extended to increase the number of special supply units.
The number of properties available for rent will also be increased. In addition, the government will take measures against jeonse (a system in which a tenant can live in a property without paying monthly rent during the lease contract period by depositing a security deposit with the landlord) fraud and low wolse (monthly rent) prices.
To stabilize the situation, incentives will be introduced for landlords who keep their jeonse deposits below a certain level relative to the price of the house, and the guarantee system for tenants will also be improved.
Specifically, in order to expand supply, the government pledged to introduce a rapid housing supply approval system and to include construction cost dispute settlement in the scope of review by the Urban Dispute Adjustment Committee.
The aim is to resolve the issue of high housing sales prices by shortening the period for obtaining housing permits, reducing project costs, and ensuring transparency in construction costs.
He also announced that he would ease procedures for redevelopment and reconstruction, as well as floor area ratio and building coverage ratio.
This can be interpreted as an intention to ease regulations on the construction of the city, but it also comes with a caveat that the city will proceed under the principle of strengthening public security.
This can also be seen as a continuation of urban renewal and redevelopment projects. The supply of public rental housing for low- and middle-income earners will also be expanded. The plan is to gradually increase the proportion of public rental housing,
Increase the number of self-help public rentals and affordable housing. In particular, take measures to alleviate housing shortages in areas such as 'chokbangchon' (areas where the poor live in small rooms).
The government's policy direction has shifted to supply, as the demand suppression policy of the Moon administration, which was centered on taxation and lending restrictions, has been deemed ineffective.
It is analyzed that the judgment that the price of movable property has risen is the driving force behind this. Specifically, the Moon administration has targeted restrictions on the reconstruction market in Gangnam, Seoul, and imposed a ceiling on the amount of money that can be borrowed from the government.
The government enacted two new laws, including a new law for rent control and a right to request contract renewal, and expanded the designation of areas subject to adjustment, areas subject to speculation, and areas subject to overheated speculation.
As property values soared, the government even strengthened the comprehensive real estate tax on multiple homeowners. However, contrary to the government's intention, the total loan amount restrictions and punitive tax policies ended up affecting the capital area, including Seoul.
This led to a "balloon effect" that boosted housing prices across the country, breaking the ceiling on ultra-high housing prices and resulting in a polarization of housing prices.
At the time, one expert said, "(Moon's policy) is a unique mechanism of the Korean housing market.
"The problem is a lack of understanding of the relationship between the organic buying and selling market and the jeonse and wolse markets, as well as excessive regulation that has led to speculative behavior," he said. "The government has repeatedly announced regulatory policies and has not implemented appropriate measures."
"This is the result of the failure to create a sufficient supply expansion," he said. Lee's supply-centered message was also echoed by the fact that Seoul Metropolitan Government recently completed construction of the Jamsil-Samseong-Daechi-Cheongdam
Some analysts say this is the result of being aware of the policy changes that have occurred, such as removing the area known as the Gangnam region from the list of land transaction permission areas (dokyo area) and then redesignating it.
As a candidate, Lee had in mind Seoul Mayor Oh Sehun, who "suddenly lifted land permits and suddenly re-imposed restrictions, expanding restricted areas.
"We must not make the market anxious by changing policies back and forth," he said. "From now on, we must respect the market with stable real estate policies, and the more we try to suppress prices, the more they will rise.
However, experts say that Lee's simple supply policy alone is not enough to ease the trend of "smart single-family homes," which has recently become more serious.
In fact, after taking office, former President Yoon had planned to revise the previous administration's tax policies targeting multiple homeowners and high-priced homes, such as relaxing the comprehensive real estate tax, but ultimately failed to implement them.
It is expected that if the Im administration is limited to the concept of “tax cuts for the wealthy,” it will be difficult to actively ease the restrictions on demand. In addition, interest rates on home mortgage loans have recently hit the 3% level, and this month
The Bank of Korea has also lowered the base interest rate since the beginning of the fiscal year, so the sentiment for home buying can recover at any time. A three-stage stress DSR (total debt former interest service ratio) will be implemented from July, but the interest rate
Some are predicting that the downward trend will effectively offset the effects of the lending restrictions.
The upward trend is likely to continue. Professor Kim Jin-yu of the Department of Urban Transportation Engineering at Kyunggi University said, "In response to the soaring prices in Gangnam and Seocho, maintaining reasonable prices through supply is the key.
"This is a very difficult task to achieve," he said, predicting that "appropriate demand management will be unavoidable in mitigating the 'Smart One House' problem."
Yoon Ji-hye, head of the Real Estate R114 Research Lab, also said, "The Gangnam area is a great place for loans, taxes, condominium sales, and development projects.
"If the price cap is lifted, prices will rise dramatically again, weakening the supply effect, so it will be difficult to create a balance," he said.
"It will not be easy to take that position," he said.
2025/06/05 06:17 KST
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