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| Deputy Prime Minister and Finance Minister Hong Nam-ki, second from right, speaks during a ministerial-level meeting at Seoul Government Complex in Gwanghwamun, Wednesday. Yonhap |
Experts say 'self-serving, out-of-touch' remarks frowned upon
By Lee Kyung-min
Deputy Prime Minister and Finance Minister Hong Nam-ki said the panic-driven buying spree in the property market is showing signs of subsiding, a statement that fails to reflect the rapid spike in apartment prices over the past few years, experts said Wednesday.
More worrisome, they claimed, is the renewed emphasis on the continued, strong push concerning measures to curb real estate speculation in Seoul and major satellite cities without properly addressing the backlash from homeowners and tenants suffering due to the corresponding spike in jeonse price. Unique to Korea, jeonse is a home renting system whereby tenants pay a lump sum refundable deposit in lieu of monthly rent.
Experts say policy priorities should be focused on helping tenants with stable living arrangements, while taking into account the visibility of returns for property owners, instead of resorting to blanket, demand-crushing measures certain to fuel expectations on further price hikes that end up disorienting the market.
Hong said market sentiment ― largely viewed as a preceding indicator to apartment price ― has shown signs of stabilizing recently, a change he said reflects the declining demand for housing in Seoul from non-Seoul residents.
"The supply-demand indicator shown by the Korea Appraisal Board (KAB) has edged down to 100, a figure of equilibrium, and data from KB Kookmin Bank shows that in the past two weeks those seeking to sell their homes outnumbered those seeking to buy," he said at a ministerial-level meeting at Seoul Government Complex in Gwanghwamun, Wednesday.
A website that explains the government's plan to create a group of new satellite cities in Gyeonggi Province and Incheon by as early as 2021 recorded more than 1 million hits, which he said was an indication that the intensity of the much-heated market will cool down gradually on hopes of additional supply.
Also strengthening his assessment was the apartment price in Seoul inching up 0.01 percent week-on-week for the fourth straight month as of the second week of September, backed also by the figures for the four high-demand districts in southern Seoul remaining unchanged for the sixth consecutive month.
"The rate at which the real estate market stabilizes will be determined by whether market expectations are readjusted on possible further government curbing measures," he said.
But the optimism is self-serving given real estate prices spiked as a result of government policies, according to Seoul National University economist Lee In-ho.
According to data submitted by the KAB to a local lawmaker, the number of homes worth less than 600 million won ($515,000) was halved, while those worth 900 million and more doubled over the past three years.
Apartments worth less than 600 million won accounted for 67.3 percent of the total in May 2017, but plunged to 29.4 percent as of June 2020. By contrast, the number of apartments valued at 900 million won or more soared to 39.8 percent of the total, nearly 2.5 times the 15.7 percent in the same period.
Also noticeable was the over-triple increase in the number of properties worth 1.5 billion won or more from 3.9 percent of the total to 15.2 percent.
"It is obviously self-serving," Lee said. "The price shot up due to two dozen botched real estate policies pushed ahead by the government that repeatedly ignored calls to respect market principles. What the top policymaker is eager to dub a success in stabilizing the price would not have been necessary in the first place, had the government been less frantic in its futile, failed attempts at managing people's expectations and their subsequent behaviors."
