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2017-11-28 16:58
Korea’s housing supply ratio has long passed 100 percent, meaning every family could have its own home ― in theory.

In reality, lots of families are without homes reeling under rocketing rents and key money (deposits). Even many who have homes are called “house poor” because they have to spend substantial shares of their income to repay the principal and interest on their mortgages.

All this is due mainly to the extreme imbalance in home ownership, for example between speculators and end users, and between young workers and old retirees.

The Moon Jae-in government’s five-year “housing welfare roadmap” unveiled Tuesday is right on target as it focuses on dissolving such an imbalance. The plan calls for, among other things, supplying 1million rental homes to homeless young people, newlyweds and low-income working families at prices far lower than market rates.

The sharp increase in rental homes, if combined with an anti-speculation policy of tighter bank lending and heavy taxation on multiple homeowners, will likely help ease the polarized home ownership. The roadmap also introduces a system, in which elderly people who have homes but little fixed income can hand over their properties to the state housing agency. The agency will then remodel the houses and sell or rent them to young workers while paying pensions to the former owners, solving the generational imbalance.

As always, however, the incumbent administration needs to learn from the failures of its predecessors. The Lee Myung-bak government’s “nest home” plan _ which aimed to build small and midsize public tract houses and rental homes in greenbelt areas _ only resulted in a speculative boom. A similar policy of the Park Geun-hye administration called the “new stay” also got nowhere as it ended up only fattening the pockets of construction firms by offering them too many incentives.

These previous governments incurred more than a 130 trillion won ($119 billion) debt by building lots of “unprofitable” rental homes in unpopular areas.

True, homes should be for living in instead of owning in this densely-populated country, to create an economy built by earned income, not unearned yields from real estate.

The failures of past governments point to the need for far more elaborate planning and stricter implementation.

 

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