"Won't Lose in the War Against Speculation"… A Prelude to High-Intensity Regulation?

"Government's Commitment to Stabilizing the Real Estate Market, Protecting Genuine Buyers, and Curbing Speculation is Firm"
If the Balloon Effect Continues, Additional Measures Such as Strengthening Reconstruction Eligibility and Taxation May Be Introduced

[Asia Economy Reporter Chunhee Lee]

[Image source=Yonhap News]

President Moon Jae-in has declared a 'war against real estate speculation.' He expressed a strong determination to stabilize housing prices, stating, "We will never lose."

In his New Year's address announced on the morning of the 7th, President Moon spoke about this year's real estate policy. Although the content was brief, limited to just one paragraph, it was regarded as containing a powerful message.

President Moon declared, "The government's will to stabilize the real estate market, protect actual buyers, and suppress speculation is firm," adding, "We will never lose in the war against real estate speculation." He also stated, "We will steadily expand housing supply" and "We will make every effort to protect the housing of ordinary citizens, including newlyweds and single-person households."

This strong statement came two months after his remarks in the 'Dialogue with the People' last November, where he said, "I want to confidently assure you," and "If we cannot control real estate prices, we will continue to devise stronger measures to definitely control them."

President Moon's comments on real estate policy recall the past Roh Moo-hyun administration. In 2005, marking his second anniversary in office, former President Roh declared in a national address, "We will stabilize the market even if it means waging a war against speculation," and "Whenever signs of speculation appear, we will use all means to stop it." Six months later, the so-called 'historic measures' of August 31 were introduced. Various policies were launched, ranging from strengthening comprehensive real estate taxes and expanding price ceiling systems to mandating actual transaction price reporting and expanding supply through developments like Songpa New Town (now Wirye New Town).

The Moon administration has also been rolling out high-intensity policies continuously. After the housing price rise, which briefly slowed following the September 13, 2017 measures, reignited last year, the government reintroduced the December 16 measures, which included ultra-strong regulations such as banning mortgage loans on ultra-high-end homes priced over 1.5 billion KRW. Initially limited to 27 neighborhoods in Seoul as a 'pinpoint regulation,' the application of the private land price ceiling system quickly expanded to include areas in Gyeonggi Province outside Seoul, transforming into an all-encompassing regulation.

Through these strong regulations, the rise in apartment prices in Seoul has slowed to a firm trend, showing policy effects. However, there are concerns about balloon effects on homes priced below 900 million KRW or in non-regulated areas that have escaped these regulations.

Starting next month, the Ministry of Land, Infrastructure and Transport will have direct investigative authority over actual transaction price reports and will establish a continuous investigation system with the Korea Real Estate Board. On the 3rd, a legislative notice was issued mandating detailed funding plans for homes priced over 600 million KRW nationwide, continuing follow-up measures to the December 16 policies. However, if the real estate market remains volatile despite these efforts, there is speculation that even stronger regulations may be introduced.

The market is concerned about various additional measures, such as extending the reconstruction eligibility period from the current 30 years to 40 years and strengthening various tax measures related to multi-homeowners.

The reappointment of Minister Kim Hyun-mi of the Ministry of Land, Infrastructure and Transport, who has led real estate policies continuously since the government’s launch in 2017, adds weight to these expectations. Minister Kim, who announced she would not run in the general election, recently expressed her intention to continue policies aimed at stabilizing the real estate market, saying, "I think I will be serving as minister for quite a long time."

This content was produced with the assistance of AI translation services.