"Every housing measure the Lee Jae-myung administration puts out is designed around the capital region. It would not be an exaggeration to call it a killing of the provinces. A two-track strategy tailored to the realities of the capital region and the provinces needs to be considered," said Lee Sung-kwon, a lawmaker of the People Power Party.
The opposition People Power Party held a forum at the National Assembly on the 9th titled "Regional Property Markets Sunk in a Swamp of Unsold Homes: What Is the Solution?" and sharply criticized the current government's housing policy. The forum, hosted by Lee, who chairs the party's Busan chapter, and the Korea Housing Builders Association, drew a large turnout of party lawmakers including Kwon Young-se, Kim Sang-hoon, Shin Sung-bum, Woo Jae-joon, Lee In-seon and Han Ji-a.
Kang Jeong-kyu, dean of the Graduate School of Real Estate at Dong-A University, who delivered the keynote presentation, said the slump in regional housing markets does not stop at falling home prices or fewer transactions. "It leads to a vicious cycle of deteriorating finances at local construction firms and a shrinking regional economy," he said. "It needs to be approached in connection with the regional economy and the problem of regional extinction, beyond the dimension of the property market alone."
According to Ministry of Land, Infrastructure and Transport data on unsold homes nationwide, there were 68,217 unsold homes across the country as of July this year, of which 48,758 were outside the capital region. "There is a need to revive the registration system for rental business operators buying apartments limited to the provinces, and to pair it with related tax support," Kang said. "Project financing support for small and mid-sized housing builders in the provinces should also be expanded."
In the discussion that followed, Hwang Kwan-seok, a research fellow at the Korea Research Institute for Human Settlements' Real Estate Market Policy Research Center, also proposed expanding financial and tax support. "In the provinces, apartment prices are relatively low and loan-to-value ratios are managed at 70%, so the risk of financial distress or delinquency is not high," Hwang said. "The scope of tax reduction eligibility and the level of support for the acquisition tax, capital gains tax and comprehensive real estate holding tax need to be expanded."
Kim Jong-eon, head of the policy management division at the Korea Housing Builders Association, said more than half of the roughly 8,000 small and mid-sized housing builders nationwide are based outside the capital region and that the market is difficult enough to describe as a crisis of withering away. "The capital region and the provinces are completely different housing markets," Kim said, urging that the grounds for designating support areas for depressed regions be written into the Housing Act. "A legal framework needs to be put in place so that tax and financial support applies automatically once the requirements are met."
