Land Minister Kim Yoon-duk delivers a policy briefing during a plenary meeting of the National Assembly’s Land, Infrastructure and Transport Committee on Aug. 11.LIM HYUN-DONG
Cho Min-geun
The author is an editorial writer at the JoongAng Ilbo.
The government appears to be in a hurry. Just one day after announcing its housing supply package on Thursday, Land Minister Kim Yoon-duk raised the possibility of using Yongsan Park in Yongsan District, central Seoul, for housing. The market had responded coolly to the promise of more than 230,000 additional homes.
The public has grown accustomed to government targets. Last September, officials pledged to start construction on 1.35 million homes over five years, averaging 270,000 annually. But this year, actual housing starts have reached only 19 percent of the target in Seoul and 24 percent across the capital region.
Even the government may doubt whether Yongsan Park can become its trump card. For two decades, conservative and progressive administrations alike have sought to develop the historically significant site into a symbolic park. Projects at the Taereung golf course and the Gwacheon racetrack have made little progress due to opposition from residents. Building public consensus over Yongsan will hardly be easier.
President Lee Jae Myung’s repeated meetings with ministers before the supply announcement probably reflected this frustration. Paradoxically, they also help explain why the government became so fixated on taxation.
But the government’s proposed tax overhaul is also facing resistance. If policymakers thought that they could reduce the political burden by targeting only ultraexpensive homes while placating angry voters, they underestimated the problem. Housing anxiety will not disappear merely by soothing resentment toward the wealthy when prices of moderately priced apartments, jeonse (lump-sum) deposits and monthly rents are also surging.
With falling approval ratings and concerns emerging even within the ruling bloc, the government has retreated, saying that the proposal is not final. But changing its basic framework will be difficult. More exceptions and complicated tables could leave an already complex tax system even more convoluted.
One wonders what gave the government such confidence in the first place.
Housing is inherently difficult. Few fields produce such divergent diagnoses and prescriptions even among experts. Korea’s longstanding belief that real estate never loses value is deeply entrenched, and about 70 percent of household assets are concentrated in property. Supply also cannot respond instantly to demand. Homes cannot simply be “churned out like bread,” as current and former land ministers have complained.
Warning signs appeared early this year when Lee personally entered the debate and suggested that solving housing problems was far easier than his campaign to clean up illegally occupied valleys when he was the governor of Gyeonggi. He publicly set priorities including restrictions on ultraexpensive homes, nonresident owners and multiple-home owners.
The Financial Services Commission subsequently pursued a “separation of real estate and finance,” and fiscal authorities moved toward what they called “tax normalization.” Inevitably, this revived memories of the Moon Jae-in administration.
Its housing policy also began with great ambition. Officials proclaimed that they were confident that they could control housing prices and even reshape the market itself. The current ruling party should remember better than anyone what that “arrogance and prejudice” ultimately produced.
Looking back, perhaps the only consistently effective tool used by successive governments has been lending restrictions. They are controversial and burdensome, but when liquidity is abundant, restricting credit may be unavoidable.
The Lee administration imposed unusually stringent lending restrictions from the outset. It should have stopped there. Instead, it went further, promoting a theory of a “money move” to justify broad lending controls while trying to redirect capital toward the stock market. In the process, it effectively turned a blind eye to risky debt-financed stock investment. The repercussions spread throughout asset markets, adding to the confusion.
Past governments have left one clear lesson on housing policy: There is no shortcut. The best approach is to find the right policy mix to prevent speculative demand while ensuring a steady flow of new housing.
Policymakers must also resist the temptation of a dramatic cure. Sweeping measures invariably leave sweeping side effects. If regulation is unavoidable, the government should make every effort to explain it to citizens who will bear the inconvenience and cost.
That requires starting by abandoning arrogance and prejudice and approaching the market with humility.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
