Reporter's Notebook Finance minister's blind optimism on Korean housing market

Finance Minister Hong Nam-ki, left, attends a meeting on the current housing market trend at the Government Complex in Seoul, Wednesday. Yonhap

By Lee Min-hyung

Finance Minister Hong Nam-ki's recent remarks that the Korean housing market “entered a stabilization phase” are drawing anger from the public, as many still believe the market merely froze in the aftermath of a shoddy set of regulations.

“The perception is expanding that the housing market passed the inflection point and entered a downward stabilization period,” Hong said Wednesday.

He reiterated the government's strong will to maintain a tough regulatory stance in order to fully stabilize the market.

However, many people still wonder if the market has actually stabilized, as they believe that the years-long surge in apartment prices in Seoul and major cities nationwide has temporarily stopped due to tight lending rules introduced by the government over the past two years.

A widespread perception here is that most potential buyers will continue to maintain a wait-and-see approach before purchasing homes ahead of the upcoming presidential election in March. Few statistics currently indicate market stabilization in major areas ― including Seoul. Given the steep decline of apartment supply in the capital city for the next few years, chances appear slim for the market to enter a period of stabilization on a longer-term basis.

Hong cited data on the latest market trends, saying that housing prices in Seoul have been on the decline for four consecutive weeks.

Nevertheless, the number of transactions is not high enough to come to an abrupt conclusion.

According to data from the state-run Korea Real Estate Board, the number of apartment transactions in Seoul last year reached 49,751, down 47 percent from 2020, due largely to the government's lending restrictions. They include a ban on purchasing homes in regulated areas by taking out non-collateralized loans of more than 100 million won. The rule was introduced in November 2020 as part of the government's move to tame a surge in borrowing to buy homes.

There have been enough empty promises with regards to the housing market policy. It is high time for the government to stop promoting such blind optimism and introduce long-term policies more carefully.