Government accelerating moves to revamp real estate policy

Finance Minister Hong Nam-ki speaks during a ministerial meeting to discuss the real estate market at the Government Complex Seoul, Wednesday. Yonhap

Land ministry unveils supply plan of 30,200 new homes

By Lee Min-hyung

The government is accelerating moves to revamp its real estate policies in order to increase the supply of housing and ease regulations to alleviate market concerns and regain the public trust, following the ruling party's failure to win in the April 7 by-elections for mayors in Seoul and Busan, the country's two largest cities.

In a ministerial meeting to discuss the housing market, Wednesday, Finance Minister Hong Nam-ki hinted at the possibility of revising the government's regulation-driven real estate policies.

“The government will hold negotiations with parties to review a series of real estate-related issues here as soon as possible, with a view to clearing away lingering market uncertainties,” Hong said.

The government has introduced a series of tightened housing policies in recent years, but these resulted in the driving up of property prices nationwide. With apartment prices rising, more non-homeowners jumped into a panic buying spree, which has kept housing prices rising.

After the by-election losses, the government and the ruling Democratic Party of Korea (DPK) indicated that they could modify the regulation- and tax-oriented policies.

In addition, a nationwide scandal surrounding real estate speculation by some officials from the Korea Land and Housing Corp. (LH) has escalated public anger, which pushed the government to swiftly change its housing policies.

Hong said during a recent National Assembly interpellation session that the government was considering easing rules on the comprehensive real estate holding tax. Under current tax regulations, those who own property valued over 900 million won ($805,000) should pay the tax, but Hong told lawmakers that the government was reviewing whether to raise this amid the ongoing apartment price hikes.

To offset the public's discontent on a lack of housing, the Ministry of land, Infrastructure and Transport unveiled plans Wednesday to supply 30,200 pre-subscription apartments this year in areas designated as the nation's third new town development project.

It expects the pre-subscription to help prevent the market from overheating further and provide more chances for non-homeowners, particularly in the younger age groups and newly-weds, to obtain homes at a reasonable price.

About half of the apartments will be supplied to newly-married couples, and their sales price will be set at around 70 percent to 80 percent of the market value in the surrounding area. The land ministry plans to supply a total of 62,000 units by the end of next year under the scheme.

The government is focusing on relieving housing problems among the younger generation, as the ruling party's crushing defeat in the by-elections clearly showed it was losing votes particularly among the younger age groups who feel a growing sense of frustration over the administration's botched housing policies.

The finance minister also mentioned specific areas and measures for restructuring of the state-controlled LH.

“The renovation measures will be centered on three key areas ― an organizational reshuffle, internal anti-speculation control measures and management reform,” Hong said.

Myongji University professor of real estate Kwon Dae-jung urged the government and the authorities to devise specific measures to block LH and government officials from engaging in illegal real estate speculation using “borrowed names.”

“The pan-governmental investigation of the LH fiasco will not bring about visible outcomes unless specific measures are introduced to prevent officials from investing in land or properties with borrowed names,” he said.