Park Hong-keun, minister of planning and budget, said the government will consider offering tax breaks to universities that buy dormitories or buildings near campus, part of a push to expand policies addressing housing for young adults.
Speaking at a lecture at Korea University in Seoul on Sept. 14, Park cited the idea that tax incentives could encourage more aggressive investment when universities purchase dormitories or nearby buildings, and said, "We will look into that as well." The government plans to spend about 18 trillion won ($13 billion) next year to supply 106,000 public rental homes for young adults.
On the mismatch between supply and demand for jeonse (a lump-sum deposit lease) and monthly-rent housing in the greater Seoul area, Park said, "I think part of the problem is that local governments such as the Seoul city government have not moved quickly enough on this." Park said the central government has a responsibility to supply public housing, "whether by building it directly or by buying it," stressing the need for a more active role in stabilizing housing. He added that public housing alone cannot meet demand, so the government should also spur private supply by easing constraints such as floor area ratios and lending rules.
On the Future Response Fund, to be created next year, Park made clear he favors flexible operation based on economic and fiscal conditions over a standardized rule. Responding to proposals that the fund's operating standard be linked to macroeconomic indicators, much like the Taylor rule in monetary policy, Park said, "That is already reflected when we draw up the budget each year." The remarks were read as effectively ruling out a separate mechanical rule.
On the scale of project spending from the fund, Park said, "Internally, we have looked at roughly 40 trillion to 50 trillion won," while adding that the level would not be kept the same every year. Projects requiring large investment at a specific point cannot be measured by the same yardstick as those such as water, power and transport, where required spending varies by construction stage, he explained.
Against calls from opposition parties and others to scale back additional treasury bond issuance, Park argued that market stability and growth investment must be weighed together. "That is a failure to see the whole picture, and I think there is also some political intent," he said. "They need to explain what effect would be produced by cutting bond issuance by a given amount."
