End of term 文·盧 Real Estate Parallel Theory… Will the house price to come like 2007?

With a lag of 14 years, the history of real estate in Korea has been repeated. The housing price graph, which rose steeply during the Roh Moo-hyun administration, was reproduced by the Moon Jae-in administration, and countermeasures were similarly developed in such a way as to increase the intensity of the regulation. With the Moon Jae-in administration’s term of office remaining for more than a year, the two governments look like decalcomani when it comes to real estate.

The Ministry of Land, Infrastructure and Transport announced on the 15th that the public price of 14.25,000 apartment houses nationwide, such as apartments, multi-family units, and alliances, rose 19.1% on average this year compared to last year. It exceeded three times the rate of increase of 6.0% last year. The published price is calculated based on the market price in December of the previous year, which means that the rate of increase in apartment prices last year was high. Apartment prices, which had risen throughout the Moon Jae-in administration’s inauguration, began to be reflected in the official prices in earnest in the fifth year of the government.

This year’s quoted price increase rate is the highest since 2007, when it recorded an increase of 22.7%. 2007 was the fifth year of the Roh Moo-hyun administration. At the time, the situation was similar as it is now. House prices, which have continued to rise since the inauguration of the Roh Moo-hyun administration, peaked in 2006, and that was reflected in the published prices. The Roh Moo-Hyun administration’s increase in the market price reflection rate from 70% to 80% also fueled the increase in the public price. The current government and ruling party are also pursuing a policy to raise the official price to 90% of the actual transaction price by 2030.

The increase in public prices has led to tax burdens on high-priced apartment owners. Due to the increase in public prices in 2007, the property tax combined with the comprehensive real estate tax increased by up to three times, mainly for high-priced housing. The controversy over the’tax bomb’ triggered by the implementation of the comprehensive real estate tax in 2005, overlapped with the increase in public prices, hitting the approval ratings of former President Roh Moo-hyun. This year, 24.2% of apartments in Seoul exceed the official price of 900 million won, which is subject to the tax tax. This is the reason for complaints that “the taxation tax was not a wealth tax, but it became a middle-class tax.”

It is Kim Soo-hyun, the former head of the Blue House Policy Office, who designed the initial real estate policy in the two governments Roh Moo-hyun and Moon Jae-in. In the Roh Moo-hyun administration, he served as the secretary for national economy and social policy at the Blue House, leading the real estate regulation policy, including the introduction of taxation tax. In the current government, he also served as the chief social officer and head of the policy office, leading regulatory policies such as designation of dumping areas. Under the’Kim Soo-hyun Control Tower’, both governments implemented strong measures to curb demand for housing in the early days of power.

However, when there was no effect, the two governments were similar in that they eventually turned to supply expansion in the second half of the rule. The Roh Moo-hyun administration proposed a plan for 50,000 households in Wirye New Town (at the time, Songpa New Town), the first full-scale supply measure as a countermeasure for August 31, 2005. During the Roh Moo-hyun administration, the rate of increase in apartment sales in Seoul rose to 24.1% in 2006, and the rise in house prices slowed from the second half of the following year, eventually recording a 3.6% increase in 2007. At the time, it was analyzed that the government’s supply expansion signal would have helped the real estate market calm down.

The Moon Jae-in administration also maintained the argument that “the current housing supply is not short” (former Minister of Land, Infrastructure and Transport Kim Hyun-mi) until last year. However, the government announced the second and fourth measures this year, which included full-fledged supply measures. Unfortunately, there are signs of a modest increase in housing prices in recent years. According to the actual real estate transaction information of the Ministry of Land, Infrastructure and Transport, the number of apartment transactions in Seoul where prices declined from the previous one was only 18.0% of the total volume in January. However, the trend is increasing to 24.9% in February and 38.8% in March.

The suspicion of speculation by the employees of the Korea Land and Housing Corporation (LH), triggered by the disclosure of a civic group on the 2nd, is becoming a’black hole’ that absorbs all the issues of the government. It is undermining confidence in real estate policy and hurting the fairness that the current government has emphasized.

During the Roh Moo-hyun administration, there was no real estate speculation incident that had as much ripple effect as the’LH incident’, but the suspicion of real estate speculation by high-ranking officials was one of the main reasons that undermined the government’s support. In 2005, the third year of the Roh Moo-hyun administration, former Deputy Prime Minister Lee Heon-jae and Minister of Construction and Transportation Kang Dong-seok resigned due to suspicion of speculation. It was just after the former President Roh Moo-hyun declared the “war on speculation” in his state affairs speech.

In particular, the fact that Kang’s sister-in-law and others purchased the land near Incheon International Airport when he served as the president of Incheon International Airport Corporation was aroused by the public’s anger. In 2007, the Board of Audit and Inspection announced the results of an audit that 62 public officials belonging to the Ministry of Construction and Transportation were speculating on real estate.

Reporter Yoon Seong-min [email protected]