President-elect Lee Myung-bak's transition team said Monday that the incoming administration's housing price control schemes will be conducted primarily by controlling loans instead of imposing taxes.
Sky-high housing prices have been a major headache for the incumbent Roh Moo-hyun government, to be replaced in February, though it has taken a series of measures to keep them in check. Some economists warn that the bursting of a housing bubble could wreak havoc on the sputtering economy.
"Real estate problems should be managed primarily by controlling liquidity, with a tax scheme supplementing it," said Kang Man-soo, a leading member of the team's economy panel.
As part of efforts to curb skyrocketing housing prices, the government introduced a "comprehensive property tax" in 2005, which levies a surtax every December on individual households whose combined home prices exceed 600 million won ($639,000).
After receiving a policy report by the Ministry of Finance and Economy, Kang said that the country's current policy of cracking down on land speculation is somewhat "wrong," adding that controlling liquidity is the basic method among other nations.
Another team member also stressed that the next government will put the stability of home prices on the front burner of the new administration's real estate policy.
"(Our) first, second and third priority will be on stabilizing housing prices," said Choi Kyoung-hwan, an official at the transition team responsible for overseeing Lee's construction and real estate policy directions.
The power transfer team, however, made clear that deregulation of housing policies will be dependent on a stabilized housing market.
Reflecting this cautious approach, experts said that the president-elect plans to monitor the effect of the current policy for at least a year before taking steps to lower comprehensive property and transaction taxes.
The transition team, meanwhile, said the finance ministry must pay closer attention to fueling growth and job creation.
The ministry said growth for this year may not exceed 5 percent, but Lee Myung-bak has pledged an average 7 percent growth for his upcoming five-year term in office.
Lee won the Dec. 19 election in a landslide victory by stressing he was the only candidate able to revive the economy.
Advisors said they will strive to push up economic growth by around 1 percentage point this year to 6 percent.
(Yonhap)