| Lee Jae-myung of the ruling Democratic Party of Korea talks about his real estate policies during a press conference at Uiwang City Poil Library in Uiwang, Gyeonggi Province, Jan. 23. On the podium where Lee stands, it is written, "Stabilize housing prices and living conditions." Newsis |
Candidates advised to watch their tongues, as in Korea, home is much more than a place to live
By Ko Dong-hwan
Among the pledges made by the candidates for the March 9 presidential election, the ones that have been drawing the most attention have to do with real estate policies, as millions of Koreans are wishing to buy their own homes amid soaring prices.
The country's housing market has long been suffering a spike in housing prices, most noticeably in Seoul and the surrounding capital area in Gyeonggi Province and Incheon.
For people in their 20s or 30s, most of whom have barely accumulated enough money, as well as those with low incomes or living under the poverty line, having their own home is widely considered a far-fetched dream.
That's why real estate has been the country's barometer, showing who is moving from one home to another whenever their "jeonse" loan (a lump-sum deposit paid by tenants prior to moving in and returned to them in full at the end of the contract) or monthly rental contract expires, and who own their own homes and simply don't have those same worries and concerns.
While varying degrees of despondency among non-homeowners are clearly present in the country, Lee Jae-myung of the ruling Democratic Party of Korea (DPK) infuriated voters in Gimpo, Gyeonggi Province, with an inadvertent comment during the four leading candidates' second TV debate on Feb. 11. While discussing the country's current real estate environment, he said that prices of apartments (the most common housing type in Korea) "with an area under 99 square meters in places like Gimpo are only around 200 million won to 300 million won" ($166,000 to $250,000).
While the average apartment in Seoul costs 1.2 billion won now ― a figure that the majority of low- to middle-income earners cannot afford ― Lee's comment aroused objections that the range of 200 million won to 300 million won is way lower than what many members of the public thought. Lawmakers from the main opposition People Power Party (PPP) questioned whether the candidate is even aware of the country's unstable housing market, which the current Moon Jae-in administration has been trying to control for so long.
The DPK election camp issued a statement on Feb. 12 explaining that what Lee meant was that he will be able to increase the supply of affordable housing in the city for singles living on low incomes.
Despite the explanation, these residents of Gimpo, west of Seoul, were still unsatisfied.
Some residents held a street demonstration on Feb. 13 in front of a subway station in the city, demanding that the candidates invest more in the city, criticizing Lee for undermining the city in the debate that was televised nationwide.
"It's evident Lee is ignoring us, otherwise he wouldn't have slipped in such a comment with absurd figures," one of the protesters said. "He didn't once ride the hellishly crowded Gimpo Goldline (a subway line traversing the city) despite his previous title as Gyeonggi Province governor. We demand that he truly understand Gimpo residents before making his pledges."
The enraged Gimpo residents were also angered by former DPK lawmaker Choi Min-hee after she shared on Facebook, Feb 14, an ad for the sale of an apartment in Gimpo with an area of 59 square meters for 320 million won. She posted it, saying, "Here, here! An apartment for sale for a little more than 300 million won!" to prove that Lee's controversial comment from the TV debate wasn't so far from the facts, and thus to support his presidential bid.
But some Gimpo residents found the post offensive, claiming she had posted it only for political reasons, at the cost of making those living in low-priced apartments feel ashamed. One commented on Choi's post that she had "snubbed not just Gimpo residents but many people nationwide who live in low-priced apartments." Others also criticized her for having violated the property rights of the person who put out the apartment ad by using it as political leverage.
Choi erased the post following the backlash, which was after the DPK election camp had told the party members to "watch what they post on social media so that it doesn't cause unnecessary commotion," earlier this month.
Whether his comment about the Gimpo apartment was a simple slip of the tongue or reveals indifference to the country's housing market, Lee has announced several real estate pledges to facilitate housing purchases and alleviate the tax burden facing homeowners.
Lee's rival, Yoon Suk-yeol of the PPP, has also rolled out some real estate pledges, though in fact not as many as Lee has actually introduced.
| Yoon Suk-yeol of the main opposition People Power Party talks about his real estate policies during a press conference at the party's headquarters on Yeouido, Seoul, last August. Joint Press Corps. |
Providing more housing
Lee and Yoon both pledged to increase the housing supply, as a supply shortage in the housing market is considered one of the main reasons behind the soaring house prices in the country.
Lee said he plans to provide 480,000 new homes to Seoulites, 280,000 to those in Incheon and Gyeonggi Province and 290,000 in other regions. In addition to the 2.06 million new homes that the Moon Jae-in administration promised to roll out nationwide, Lee projects to provide a total of 3.11 million across the country if elected.
Yoon said he will provide, in lots, 300,000 new homes to singles at below-market prices based on construction costs. He also promised newlywed couples he will provide, in lots, 200,000 new homes in the vicinity of subway stations nationwide by redeveloping underused public transit garages and rainfall reservoirs near stations into residential buildings using public funds. He also promised to provide an additional 100,000 homes by redeveloping five rising cities in the capital area ― Bundang, Ilsan, Pyeongchon, Sanbon and Jungdong ― to increase the floor-area ratio.
Lee further proposed other pledges related to affordable housing.
To provide housing in lots consistently with affordable prices and in sufficient volume, Lee pledged to reduce public housing prices by as much as half by changing back the price basis from appraised value to construction cost, as well as introducing a price ceiling regulation.
For singles in their 20s to 30s, who Lee said "have sustained all the burdens from the previous generations whose negligence brought slow economic growth and insufficient job opportunities," he promised to supply them with all the housing units around Yongsan Park in Seoul and 30 percent of new housing nationwide during his administration.
To also help those wishing to buy their own homes for the first time, Lee pledged to mitigate related financial regulations, like allowing the loan-to-value ratio to be as high as 90 percent, slashing an acquisition tax for homes worth 300 million won or less to zero and housing worth 600 million won or less to half. He also promised to diversify public housing to better cater to people with various financial capabilities and preferences.
Lee promised to revise the country's current comprehensive real estate taxation system for homeowners who unwittingly became owners of multiple homes and received hefty tax invoices. He mentioned the beneficiaries will include those who inherited homes, who owned an additional home temporarily while moving to a new workplace or school, and who operate non-profit rental housing for low-income earners or under the purpose of heritage conservation. He also proposed that low-income earners and senior citizens who own a single home for a long period should be able to delay paying their comprehensive real estate tax until they can afford it.
"While stabilizing the housing market as a fundamental condition, my real estate policies will act as a 'housing bridge,' connecting people from living comfortably without necessarily owning a home to buying their own homes easily," Lee said.