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| Seen above is a bird's eye view of apartment complexes in Seoul. / Yonhap |
Gov't urged to stop further regulations in real estate market
By Lee Min-hyung
The rich keep getting richer in the real estate market, as the government imposes "pointless" regulations to drive down soaring housing prices, experts said Wednesday.
They warned against the government's comprehensive regulatory packages in the property market, saying the measures will end up aggravating regional polarization between Seoul and other parts of the country.
President Moon Jae-in and his administration have in recent years introduced a series of tight regulatory measures, in a move to stabilize soaring housing prices mostly in the capital and its southern satellite cities
But the much-hyped regulatory policies have ended up adding more confusion to the market, and resulted in a steep rise in apartment prices in Seoul, according to data and market experts.
Statistics Korea reported that the average house price ― categorized in the top 10 percent in terms of high costs as of January ― was 977 million won ($835,000), up 96 million won, or 10.8 percent from a year ago.
But that of housing in the least expensive 10 percent category rose by about just 4 percent to reach 26 million won.
Real estate experts argued the government's continuous intervention in the market was the cause of the widening polarization in housing prices between the rich and the poor.
The Moon administration, since taking office in May 2017, has tightened real-estate regulations by driving down the requirement for the loan-to-value ratio from 60 percent to 40 percent, stressing that the move was aimed at "putting an end to the housing speculation" prevalent across the country.
But such regulatory steps ended up resulting in a drastic spike in housing prices, particularly in Seoul.
"The housing price is determined by the simple law of demand and supply," Kwon Dae-jung, a professor of real estate studies at Myongji University, said.
"To curb surging housing prices in Seoul, the government should increase the supply in the capital, not in the surrounding cities," he said. "But the Moon administration is seeking to keep controlling prices in the market, which will only have temporary, short-term effects."
It is realistically impossible for the government to reduce the demand to live in the capital, so the only solution is to come up with measures to increase the supply in Seoul, he noted.
"But the government does not appear to be taking the right steps to do this, and continues to introduce pointless regulations without seeking to resolve the fundamental problem."
On Tuesday night, President Moon reaffirmed his strong determination to implement "much stronger" measures to stabilize housing prices in Seoul, which the expert said will only end up further raising the average price in the capital.
An official from the real estate industry, who asked for anonymity, said the incumbent administration was strengthening such regulations with a view to "collecting more taxes."
"By introducing more complex and tough real estate regulations, the government can collect more property and transfer taxes," he said. "It is evident that the government is aware of the simple market rule. But it is not showing any indication that it will relax regulations, which the industry views is a political scheme to raise more taxes."
