Drastic policy changes needed to stabilize housing prices
Korea's housing prices have climbed 8.3 percent this year, marking their biggest gains in 14 years, and many Koreans think they will rise further this year. It comes in stark contrast to the sharp shrinking of consumer confidence amid the third wave of the COVID-19 pandemic. The prediction about home prices also illustrates the public's deep distrust of the government's real estate policies.
According to the Bank of Korea's latest survey, the consumer survey index (CSI) outlook for housing prices stood at 132 in December, up 2 points from the previous month. The index has hit the highest level the central bank has ever seen in the almost eight years it has been compiling related data since January 2013. The rise means many respondents think housing prices will go up in 2021, too. In contrast, most other indices, such as those concerning job opportunities and the economic outlook, fell steeply.
Since President Moon Jae-in took office in May 2017, the government and the ruling party have said, “Don't buy homes now. Wait because their prices will plunge before long.” The Moon administration has adhered to anti-market policies under the pretext of blocking property speculation and unearned income. Former Land, Infrastructure and Transport Minister Kim Hyun-mee presented price-stabilizing measures no fewer than 24 times. Still, she retreated not an inch from her baseline of designating speculation-prone areas, curbing loans and slapping heavier taxes on homeowners.
Moon's housing policy has become a total failure, a fact that allows no argument. The problem is the government refuses to admit its mistakes and tries to repeat failed policies. On Monday, Moon appointed Byeon Chang-heum as the new land minister, defying the opposition parties' objections. Byeon presents himself as one of the so-called “Georgists,” the followers of the 19th-century American economist Henry George who called for the government to collect all land revenue in taxes.
What's most urgent to stabilize housing prices is restoring the public's trust in government policy. Many Koreans regard the President's appointment of Byeon as a signal that his regulation-centered, ideology-oriented housing policy will be reinforced. The Moon government cannot win a fight on property speculation without a drastic policy change.