ED Soaring apartment prices

Homeowners in Gangnam snub anti-speculation steps

Housing costs in Seoul are going through the roof. The price of a three-bedroom apartment in southern Seoul, or Gangnam, is approaching 2 billion won ($1.88 million). The median home price in Korea’s capital city is higher than Tokyo and Osaka and similar to that of New York City and Washington, D.C.

Ironically, the Moon Jae-in administration’s “war against speculators” is sending prices in Gangnam sky high.

The Moon government seems to be waging a war it has little chance of winning. For no amount of anti-speculative steps can force these cash-laden multiple-home owners to put their extra homes on the market, as officials want.

The tighter mortgage lending rules can’t affect these wealthy investors because they draw from hoarded cash, and are not borrowing from banks. Nor does the stiffly higher capital gains tax of a maximum 62 percent make much difference to them, as they will instead keep their properties, not selling them. The politically savvy speculators think _ or know _ the government will not be able to raise property holding tax sharply, either, until after the local elections are over.

Government officials should, of course, clamp down on unlawful property dealings, including false reporting and price-fixing. However, restraining demand has its limits as anti-speculation policy, and can have desired effects only when they combine with expanded supply. The harder the government tries to force down demand in Gangnam, the hotter the people’s desire becomes to have at least one home in the posh district.

Just ask: How many, if any, ranking government officials, 42 percent of whom have two or more homes, mainly in Gangnam, have come forth to sell their surplus apartments.

The Moon administration should take a two-pronged approach: build a far larger number of decent homes in other areas and make their environment, residential and educational, next to, if not as good as, that of Gangnam. And slap steep property holding tax on multiple-home owners, regardless of elections. Speculators account for only a fraction of voters.