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Finance minister apologizes for real estate policy failure
Deputy Prime Minister and Finance Minister Hong Nam-ki attends the parliamentary audit of the Ministry of Economy and Finance at the National Assembly in Yeouido, Seoul, Tuesday. Yonhap
By Lee Kyung-min
By Lee Kyung-min
Deputy Prime Minister and Finance Minister Hong Nam-ki said Tuesday that instability in the real estate market has continued despite government policies over the past few years, essentially acknowledging the failure of policies to ameliorate the high cost of real estate here.
“It is regretful that the real estate market shows no sign of stabilization, despite the fact that the government has exhausted all policy measures,” he said at the parliamentary audit of the Ministry of Economy and Finance at the National Assembly.
However, he made it clear that no policy course correction will follow under the broad policy objective to stem speculation and provide stable housing arrangements via an increase in the housing supply.
Data from KB Kookmin Bank states that the sales price of an apartment in Seoul averaged 1.19 billion won ($943,000) last month, up 22 million won from August. The figure rose 156.78 million won in nine months, from 10.42 billion won in December of last year.
“The government has been consistent in imposing stern measures against those seeking illicit gains from real estate speculation. The government has been and will continue to be committed to cracking down on those who treat homes as a means of investment at the expense of ordinary people,” he added.
The current expansionary policy will continue through to next year, he added, to sustain a virtuous cycle of fiscal soundness for a full recovery from the COVID-19 pandemic.
“We will minimize the government budget carried over to the next fiscal year to promote effective use of the state budget. Next year's budget of 604.4 trillion won, up 8.3 percent from this year's submitted to the National Assembly, will be used to help in the robust recovery of the country's economy.”
The government has submitted a national fiscal sustainability management plan to the National Assembly, in a bid to maintain a balance between spending and consolidation from a mid- to a long-term outlook.
“From the fiscal project in 2022, we will strengthen our scrutiny through reorganizing our performance management goals and establish a smart, next-generation accounting system that bolsters policy implementation through the effective use of data and artificial intelligence, starting in January of next year,” he said.
The government will seek to improve the management system of state-run institutions, as measured by their financial soundness and the expansion of performance-based compensation, instead of compensation based on seniority.
Government measures will be more targeted to improve overall economic vitality, including consumption, investment and exports, he said, adding that recovery in consumption will be promoted further this month after the bottom 88 percent income bracket provided with disaster relief handouts begin to spend more.
An “inclusive recovery” to stabilize people's livelihoods will be prioritized to limit pandemic-triggered socioeconomic polarization.
“For the stable management of prices, the government will manage supply and demand through the effective control of stockpiles of frequently purchased daily necessities.”
More tailored measures will be provided in the coming months for the hardest-hit industries and income groups, a task to be pursued through financial assistance, including eased lending rules.
“We will closely expand the employment and social safetynet to help improve social mobility for young and low-income people.”
The government will expand research and development investments in 65 future growth products, to provide a foundation for sustainable growth.
“We will provide 1.6 trillion won in funding support next year to train 160,000 people and strengthen public-private cooperation. Innovation in the public sector will be fostered to help boost fiscal sustainability.”