State agency should reflect economic situations correctly
Statistics Korea announced recently that rental deposits and monthly rents rose 0.3 percent and 0.1 percent, respectively, last year compared with 2019. If these figures are right, it means that a lump sum rental deposit, or “jeonse,” climbed from 500 million won ($457,875) to 501.5 million won, and monthly rent, from 1 million won to 1,001,000 won, over the period. However, the figures announced show a wide disparity with those released by the Korea Real Estate Board, another state agency under the Ministry of Land, Infrastructure and Transport.
According to the board, the jeonse paid by tenants to landlords, as a deposit instead of monthly rent, rose 4.6 percent for detached homes and 7.3 percent for apartments last year. According to the private KB Housing Price Report, the median jeonse prices of apartments in Seoul have soared by 97.7 million won in the five months since July, just before the Moon Jae-in administration implemented a new tenancy law.
No tenants could accept the government statistical agency's announced figures because it surveyed changes in average jeonse prices and monthly rents paid by sample households. If these sample households had maintained existing contracts without making new ones or renewing old ones, their payments remained unchanged. The rents announced by Statistics Korea are reflected in consumer prices. The agency said consumer prices rose 0.5 percent last year. Suppose the state statisticians reflected jeonse rates and monthly rents closer to reality. In that case, consumer price gains might have been different, changing any economic diagnoses.
The raw data of statistics is needed for making policies. If the basic data is wrong, diagnoses and remedies would also go awry. The Moon administration has announced no fewer than 24 sets of real estate measure so far, attributing soaring home prices to speculation and focusing on regulations to clamp down on speculators. One can't help but suspect all this is due to policymakers' input of erroneous statistical data that housing supplies are sufficient. It is regretful that Statistics Korea is often embroiled in controversy over its credibility. The agency should cast off the stigma by rectifying rent-related statistics by inputting “new” tenants' jeonse prices and monthly rents.