[In-Depth Look] Let's Strengthen the Immunity of the Housing Market

Jin Miyun, Research Fellow at LH Land and Housing Institute

Interest in immunity is higher than ever due to the novel coronavirus infection (COVID-19). Immunity is the body's ability to protect itself from external viruses and bacteria. If this protective barrier does not function properly, one is more likely to catch colds frequently or feel fatigued due to decreased physical strength. There is a corresponding self-purification function in the housing market as well. The market's immunity is strengthened by its self-regulating ability to ensure the market operates according to its principles. However, until now, the housing market has not been able to fully demonstrate this self-purification ability. Much of this is due to the speculative virus.

The contagiousness of the speculative virus is not a recent phenomenon. Riding the wave of the apartment syndrome in the 1970s, the speculative fever flared up with the rise of "tteotdabang" (illegal real estate brokers) in the 2000s, and recently, various real estate online communities on SNS platforms and YouTube videos have continuously stirred speculation and market manipulation such as collusion on house prices. The names given to areas with rising house prices have also evolved from the 2006 Bubble Seven (Gangnam, Seocho, Songpa, Mokdong, Bundang, Pyeongchon, Yongin) to more recent terms like Mayongseong (Mapo, Yongsan, Seongdong), Nodogang (Nowon, Dobong, Gangbuk), and Suyongseong (Suwon, Yongin, Seongnam), solidifying their place as real estate neologisms. Under the current government, there have been more than ten measures to curb real estate speculation. On February 21 of this year, the government launched a task force to respond to illegal activities in the real estate market, deploying special judicial police and opening a Real Estate Transaction Order Disruption Reporting Center to receive reports of illegal acts. In response, a variety of real estate slang has emerged to evade crackdowns. There have even been incidents that cannot be simply laughed off, such as apartments being likened to popular restaurants and real estate to "Matdongsan" (a pun meaning "delicious hill").

Amid this, the COVID-19 situation will become another unexpected challenge testing the housing market's immunity. Although it is still too early to detect significant changes in market indicators, since governments worldwide are treating the current situation as a wartime scenario, concerns about a global economic recession and a complex downturn cannot be ignored. We have experienced external shocks such as the 1997 Asian financial crisis and the 2008 global financial crisis. How can we guarantee that incidents like falling house prices, construction company bankruptcies, mass unemployment, large-scale unsold housing, house poor situations, and "empty shell" homes will not recur? House prices, which have been excessively inflated by speculation and excessive demand, could fall even more sharply. With stock and financial markets fluctuating wildly, it is difficult to expect the housing market alone to remain resilient.

So far, the government has steadily worked to improve the housing market's structure and enhance its immunity. Nowadays, it is very natural to report house prices under one's own name, but when the Real Name Real Estate System (1995) and the Real Estate Actual Transaction Price Reporting System (2006) were introduced, there was significant opposition, citing violations of the principle of private autonomy and concerns about transaction contraction. However, these policies became the starting point for resolving structural blind spots in the opaque real estate market and laid the foundation for detecting abnormal transactions and operating the Real Estate Transaction Order Disruption Reporting Center in response to recent forms of mutated real estate speculation. Yet, this is still incomplete. Eradicating speculation and creating a fair and transparent real estate market is not solely the government's responsibility. Public awareness must also be raised. Moreover, immunity is not strengthened solely by eradicating speculation. To become a market resilient to shocks, the presence of public housing to check the private landlord-dominated market must increase, and institutional supplements are needed to ensure that the housing rights of the vulnerable and disadvantaged are not pushed out of the market. The so-called "Housing Welfare Roadmap 2.0," announced by the government on March 20, which includes mid- to long-term housing welfare measures through 2025, is expected to fulfill such roles by strengthening the housing safety net in the current crisis.

Jin Mi-yoon, Research Fellow, LH Land and Housing Institute

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