The Aug. 13 housing measures, launched under the banner of accelerating housing supply, are stumbling from the very start. At a press briefing on the 14th, Land, Infrastructure and Transport Minister Kim Yoon-duk said there was "no legal or institutional restriction" on pushing ahead with plans to use greenbelt land in Seoul, even without the city government's consent. Although the minister pledged "to cooperate as much as possible with the Seoul city government," the remark reads as a signal that the ministry will not rule out acting on its own if no agreement is reached.
Seoul Mayor Oh Se-hoon voiced renewed opposition to lifting greenbelt designations that day at a floor meeting of the People Power Party. "It is regrettable to exclude the Seoul city government from the policy decision-making process," Oh said. Kim and Oh are scheduled to meet on the 20th to discuss housing supply plans.
Another point of contention is the move to block jeonse loans, on top of tighter comprehensive real estate tax and capital gains tax for owners of a single home who do not live in it in the Seoul metropolitan area. Concerns have emerged that if landlords push out tenants to occupy the homes themselves, or pass the increased tax burden on to rent, the measures could stoke instability in the lease market, contrary to their intent. Oh took direct aim at the policy, saying the government "must first conduct a full review of the owner-occupancy-obsessed policy that shakes the lease market and deepens public suffering," and that it "must discard the one-size-fits-all mindset that treats people as speculators based solely on whether they live in the home."
The government's resolve to speed up housing supply and curb speculative gap investment — buying a home while a tenant's jeonse deposit covers most of the price — is worth acknowledging. But lifting greenbelt designations in Seoul and pursuing urban redevelopment, the core of these measures, will be hard to accelerate without the cooperation of the Seoul city government, a local authority. Running policy by first tightening taxes and lending rules based on owner-occupancy, then belatedly granting exceptions each time side effects surface, only heightens market uncertainty. Little wonder that even within the ruling party, critics have said "trust in the property market has broken down" and that "at this rate it's headed for disaster."
No government beats the market. While pressing ahead with expanding supply, the government and the ruling party must closely weigh the impact that tax and lending regulations will have on the market. The Land Ministry and the Seoul city government, too, must set aside their draining power struggle and pool their efforts toward expanding supply. Excessive lending curbs and heavier tax burdens that unsettle the rental market must be adjusted flexibly, reflecting the voices of the market. There must be no more cases in which the fallout from policy confusion lands on the innocent housing costs of low- and middle-income households.
