‘2021 New Year Press Conference’ on the 18th of President Wen
Real estate failure, de facto self…
Announcement before the New Year’s breakthrough measures…Expected supply of ‘300,000 households’
It takes 3-4 years to actually complete it… Lack of’quickly extinguishing’
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President Moon Jae-in said in relation to the real estate countermeasures to be announced before Lunar New Year on the 18th, “It aims to relieve the public’s anxiety over shortage of supply by specially increasing supply far beyond what the market expects.” As a plan for this, public-led redevelopment and bold supply in Seoul station area and new housing sites were suggested. Regarding the amnesty issue of two former presidents Lee Myung-bak and Park Geun-hye, where the attention of the politicians was focused, he drew a line saying, “Now is not the time to speak of amnesty.”
President Moon admitted to a policy failure at a New Year’s press conference held at the Blue House’s Chunchu Hall on that day, saying, “We have focused on real estate speculation, but we have not succeeded in stabilizing real estate.” As the cause, he explained, “As the number of households increases, the demand for the quantity of supply we predicted further exceeds, and in the end, the shortage of supply fueled the increase in real estate prices.”
President Moon emphasized that the government will come up with groundbreaking measures that go beyond the existing procedures before the establishment. He explained that this measure also includes measures to increase the amount of jeonse. However, he avoided specific comments, saying, “It is not desirable for the President to give guidelines” regarding the regulation of loans, which even end users are convicted of.
Regarding the profit-sharing system that the Democratic Party’s representative Lee Nak-yeon put on fire, President Moon emphasized, “It is very desirable that companies that make more money in the corona era will have a voluntary movement to help victims and the government provides strong incentives.” did. Despite the opposition from the management community, the president directly raised the need for a profit-sharing system following the ruling party.
President Moon, conscious of the voices of concern over side effects, explained that “the government cannot enforce it by institutionalizing it”, but also explained that “the government is not enough to prevent all polarization of K with only the role of finance”. When the Korea-China Free Trade Agreement (FTA) was signed, he presented a case in which the’Rural Community Win-win Cooperation Fund’ was operated and said, “There has been such precedent in the past.”
Regarding President Moon’s remarks on the day, the business community responded that “to mention the profit-sharing system even before the president is virtually anti-compulsory”. The opposition, the people’s strength, pinpointed President Moon’s perception of reality and commented, “It was’empty 120 minutes’ filled with only the words the President wanted to say rather than what the people wanted to hear.”
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President Moon unveiled a blueprint for supply measures that will come before Lunar New Year’s press conference. President Moon said, “The aim is to relieve the public’s anxiety about the shortage of supply by specially increasing the supply of such real estate far beyond the level expected by the market.” Expert and market valuations are not friendly. The emphasis on supply expansion is positive, but it takes at least three to four years to complete construction, which is not enough to extinguish an immediate fire. In addition, there is nothing that has changed from the previous position, such as turning the surge in housing prices to a’surge in the number of households’ and’continue to maintain regulations that have created side effects such as the new rental law’. Suh Jin-hyung, professor of business administration at Kyungin Women’s University (Chairman of the Korea Real Estate Association) said, “The government has a basic responsibility to predict changes in the population structure, such as the differentiation of the number of households, and to establish a mid- to long-term supply plan.” He pointed out that the intention to avoid policy failures, such as the 2nd Lease Act, is the word that has been called.”
◇It seems to contain 200,000 to 300,000 homes, which exceeds market expectations = President Moon’s order for unprecedented supply measures is expected to increase the range of supply plans that will come before the Lunar New Year. The New Year’s measures include additional measures for jeonse. Accordingly, the government’s housing supply measures before the Lunar New Year holidays are expected to include plans to supply public housing and increase the amount of jeonse. There were many opinions in the market that initially expected the supply of 100,000 to 150,000 households. However, as President Moon announced that he would offer more than expected from the market, it is expected that a plan to supply 200,000 to 300,000 households would be included.
The supply plan currently being discussed is the high-density development, semi-industrial areas and low-rise residential areas in Seoul. Currently, the floor area ratio of buildings near major subway stations in Seoul is 160%, but it plans to dramatically increase the supply of housing by developing high-density to 700%. In addition, it is expected to increase the supply volume by expanding the radius of the station area from 350m to 500m and changing some semi-industrial areas to residential areas. Public redevelopment and public reconstruction are also expected to increase supply. The government and the Seoul Metropolitan Government previously announced that they would select 8 places including Heukseok District 2 in Dongjak-gu, Seoul as pilot projects for public redevelopment and supply 4,700 households. In addition, it is expected that regulations on street housing maintenance projects and small-scale reconstruction projects will be relaxed, and additional measures to revitalize the conversion of hotels and offices are expected. Regarding the amount of jeonse, it is expected to further expand the amount of publicly purchased lease. An official from the government said, “We are reviewing all measures to expand the supply of housing in downtown Seoul,” and “We plan to secure as much as possible to meet the expectations of the market.”
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◇ Regulatory universalism that still hasn’t escaped… External factors still remain = Unconventional supply plans are expected, but market evaluation is cynical. It takes a lot of time to complete, but it is expected that the anxiety sentiment will be resolved by just making a presentation. Above all, experts are concerned about President Moon’s perception of the real estate market.
Regarding the price surge, President Moon said, “As liquidity in the market continues to be abundant and low interest rates continue, funds are rushing to the real estate market. “There is a side in which demand exceeds the expected supply, which induces an increase in the market price.”
Regarding the remarks on the increase in the number of households, experts evaluate it as a remark to cover up policy failure. Professor Seo said, “Because of punitive taxation based on the principle of one household, one house, the number of households has been rapidly differentiated. The cause is blamed, making it difficult to stabilize the market.” In addition, it is not different from the policies that have been maintained since the inception of the statement that it will continue to maintain various regulations. Professor Kwon Dae-jung of the Department of Real Estate at Myongji University said, “Even if the government now changes its direction to supply, it will be difficult to provide psychological stability because it is not the quantity that can be occupied right away. It should be done,” he said. Professor Shim Gyo-eon of Konkuk University’s Department of Real Estate also stressed, “It is difficult to stabilize the market with public stocks,” and emphasized that “we must come up with a deregulation plan to move the private market.” / Reporters Yoon Hong-woo, Kang Dong-hyo, and Kwon Hyuk-jun [email protected]
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