"House Prices Returning to Original Levels" Direction of Moon Administration... "Precise Planning Needed"

[Asia Economy Reporter Kim Yuri] As the government sets a goal of downward stabilization of housing prices at a 'restoration to original state' level targeting the Gangnam area, controversies surrounding this have been continuously emerging in the market. Restoration to original price levels in the current state essentially means a significant crash in real estate prices. President Moon Jae-in's New Year's press conference on the 14th, where he said, "In some areas, there has been such a rapid price increase that ordinary people find it hard to accept and feel a sense of alienation. Such price increases must be restored to their original levels," sparked this controversy.

According to KB Real Estate Live On on the 16th, since the inauguration of the Moon Jae-in government in May 2017 until last month, housing prices in Seoul have risen by 17.01%. In the Gangnam 3 districts, which the government has effectively targeted, all recorded an increase of around 20%. Gangnam-gu rose by 24.59%, Songpa-gu by 21.65%, and Seocho-gu by 19.96%.

However, the rise in housing prices was not limited to some areas but showed an all-around upward trend. Yeongdeungpo-gu rose by 27.69%, which was even higher than the Gangnam area, and the increase rates in Yangcheon-gu (20.57%) and Yongsan-gu (20.91%) also exceeded 20%. Seongdong-gu (19.66%), Seodaemun-gu (19.32%), Dongdaemun-gu (18.03%), Mapo-gu (17.74%), and Nowon-gu (17.59%) also recorded housing price increases comparable to the Gangnam area.

When limited to apartments, the upward trend is even more pronounced. During this period, the apartment price increase rate in Seoul reached 22.38%, with Gangnam-gu at 27.08%, Songpa-gu at 27.37%, and Seocho-gu at 19.71%. Apartment prices in Yeongdeungpo-gu soared by as much as 30.93%. To return the price increases since the government's inauguration, housing prices would have to fall to a level equivalent to a significant crash.

Some point out that over the past 2 years and 8 months, homebuyers included not only speculative forces but also a considerable number of actual demanders, making a restoration-level price drop a risky policy goal. Experts note that artificially lowering prices by blocking demand inevitably causes market distortion. A significant portion of recent buyers who have belatedly started to purchase homes are young actual demanders in their 30s, and excessive downward price targets could harm owners of mid-to-low-priced homes in the outskirts of the metropolitan area. In fact, an analysis by the Korea Real Estate Agency of Seoul housing purchase status by age group showed that from September to November last year, 30-somethings accounted for the highest number of purchases at 8,061 cases over three months.

Experts emphasize that the government's market stabilization goals need to be more precisely designed. Professor Kwon Dae-jung of Myongji University Graduate School of Real Estate said, "Policies should induce multi-homeowners to consider putting their homes on the market, and actual demanders should be able to afford to buy homes," adding, "Above all, measures should be devised to ensure that the supply desired by market participants can proceed smoothly."

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