Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Gov't under fire for 'socialistic' real estate policies
A person passes by a real estate agency in Seoul, Tuesday, a day after the announcement of the 18th anti-speculation measures by the Moon Jae-in administration. / Yonhap
By Park Jae-hyuk
Latest measures feared to hurt free market principles
By Park Jae-hyuk
The government is facing a severe public backlash following the announcement of its latest measures to curb rising real estate prices in Seoul, which many experts claim skew toward demand-side regulations.
The experts said the government should consider supplying more homes in Seoul's affluent areas, describing the lopsided policies focusing on taxes and loan control as a violation of free market principles.
The set of rules announced Monday includes raising property taxes on multiple homeowners, banning mortgage lending on properties worth over 1.5 billion won ($1.3 million) and driving down the requirement for the loan-to-value ratio from 40 percent to 20 percent on those valued at 900 million won or higher but less than 1.5 billion won.
While legal and economic experts defined the regulations as unconstitutional and anti-market approaches, progressive civic groups claimed the policies are not effective enough to achieve their intended goals.
On Tuesday, a day after the announcement of the 18th anti-speculation measures by the Moon Jae-in administration, lawyer Jeong Hee-chan of Anguk Law Offices filed an appeal with the Constitutional Court, claiming the “Dec. 16 real estate policies” infringe on the rights to pursue happiness, equality and property rights.
“Article 23 of the Constitution provides that the right of property of all citizens shall be guaranteed, and expropriation, use or restriction of private property from public necessity and compensation therefore shall be governed by Act. However, the government measures announced a day earlier are not considered to be governed by Act,” the lawyer said in his petition.
“The measures go against the principle that rights of citizens can be restricted only by legislations enacted by the National Assembly, and this procedural defect goes against the proportionality.”
Economic experts said the government violated free market principles.
“In the free market economy, prices should be determined by the law of supply and demand, not by regulations,” said Kwon Dae-jung, a professor of real estate studies at Myongji University.
“However, the government does not have any plans to increase the housing supply in the Seoul metropolitan area.”
He also criticized Seoul Mayor Park Won-soon for his remarks that the government should triple the comprehensive real estate holding tax and the ownership of real estate should be shared among citizens.
The professor said the regulations can curb rising housing prices only in the short run without alleviating the burden on the middle class.
Despite the criticism, the top economic policymakers have taken hardline attitudes toward the market.
Following presidential chief of staff Noh Young-min's recommendation on ranking Cheong Wa Dae officials Monday to sell all their homes except for one, Finance Minister Hong Nam-ki also made the same recommendation to high-ranking government officials Wednesday.
Financial Services Commission Chairman Eun Sung-soo and Agriculture Minister Kim Hyun-soo, however, just sold their apartments in Sejong, retaining their ownerships of expensive homes in the Seoul metropolitan area.
Against this backdrop, a public poll showed Tuesday six out of 10 citizens do not trust the government's real estate policies.
According to Realmeter's survey of 500 adults nationwide, 57.6 percent responded they do not trust the administration's real estate policies.
Furthermore, the latest measures failed to satisfy progressive civic groups, such as the Citizens' Coalition for Economic Justice.
“According to our analysis, it is estimated that the nation's land prices have soared by 2,000 trillion won during the Moon Jae-in administration,” the civic group said in a statement.
“However, the government does not take the current crisis seriously, and its willingness to curb the housing prices is hardly seen in the recent measures.”