To awaken the dormant property market, the government lifted restrictions Thursday on housing transactions in three up-market Seoul districts. In conclusion, however, the latest plan to stimulate the real estate industry, the ``17th” such package by the Lee Myung-bak administration, has far more to lose than gain.
Most of all, it is doubtful it will have any positive effect on helping working-class families without their own homes own property. As anyone can see, the package, highlighted by eased mortgage rates and lower taxes in this southern Seoul area called the ``yolk of the egg,” is not for end users, who cannot and should not borrow any more with most of them indebted up to the neck, but for cash-laden speculators.
People didn’t give the nickname ``Kang Bu-ja administration” (both an actress’ name and referring to those rich living south of the Han River)” to the incumbent one for no reason.
More lamentable are some builders, property dealers and even journalists who call for the government to remove the final defense line for speculators ― ratios called DTI (debt-to-income) and LTV (loan-to-value) ― which limit banks’ lending ceiling to 40 percent of the borrowers’ income and their mortgage value throughout the country. Considering the two devices kept Korea from falling deeper into the global financial crisis, these people are demanding in effect to go back to the United States of 2008.
It is fortunate the policymakers’ memory span is at least longer than this irresponsible bunch of so-called experts.
Yet it may be too early to feel relieved, especially considering this is an election year when the government and its party will feel tempted to bolster the property markets under the pretext of economic stimulus. Unfortunately, it may appeal to Korea’s middle-income voters, who have long become hostage to homeownership, which holds up to 80 percent of their total assets. If and when that happens, the hard-won stability of home prices will be gone and the nation will go back to the bubble era of the 1990s.
The time has long past for Koreans to think homes as the subject of residence, not of possession. They must give up their addiction to property for easy life with unearned income, for the long-term sustainability of economy and society, however hard it proves to be.
The last thing they need is a government that encourages this fatal habit.