[In-Depth Review] Housing Projects Overlooked Despite COVID-19 Recovery Support and Investment

Kim Deok-rye, Director of Housing Policy Research Office, Korea Research Institute for Human Settlements

During the golden holiday in May, over 130,000 people headed to Jeju Island. People who had minimized all social activities to prevent the spread of the novel coronavirus infection (COVID-19) began to move. Considering the difficulties the aviation industry has faced due to the closure of air routes under strict social distancing policies, the increase in domestic air travel demand is like a blessing for the aviation sector. Although domestic travelers have increased, confirmed cases in major countries such as the United States, the United Kingdom, and France are still rapidly rising. Japan, where confirmed cases have surged belatedly, extended its national emergency. Globally, COVID-19 is still ongoing.

It is not only the aviation industry that is struggling due to COVID-19. With exports blocked, all key industries such as automobiles and tourism are facing difficulties. The manufacturing sector is equally challenged. The hardships in the industrial sector lead to decreased income and unemployment, which in turn significantly reduce domestic consumption. This inevitably results in financial hardship for self-employed business owners who protect local commercial districts. In March, the number of unemployment benefit recipients reached about 608,000, the highest since the system was introduced in 1995. On the other hand, the number of employment insurance subscribers was only about 253,000, the lowest since the 2004 credit card crisis. The number of unemployed people is more than twice that of new hires. The economic aftereffects left by COVID-19 are just beginning.

The government is providing full support to key industries to overcome the COVID-19 crisis and is striving to maintain consumption by distributing disaster basic income to all citizens. The housing industry should not be an exception to these efforts. Due to rising house prices in some areas such as Seoul, Daegu, and Sejong, the government has focused on regulatory policies to stabilize housing prices. As a result of strong demand suppression policies including loans, taxes, subscription, and resale restrictions, housing prices have begun to fall, especially in the Gangnam area. Price adjustments in specific regions and periods where prices rose excessively were inevitable. The government is responding quite firmly to those who have used housing as an investment (speculation) target by leveraging abundant liquidity and cash assets amid low interest rates. This government direction cannot be said to be wrong.

At some point, for some people, houses have completely turned into a means of asset accumulation. This is a very unfortunate and dangerous situation. As guaranteed by the constitution, housing is one of the basic rights related to food, clothing, and shelter. A house is needed as a space to eat, wear clothes, and rest. We must not lose a sense of balance regarding housing as an essential requirement for living. Recognizing and guaranteeing the right to housing as a living space necessary for everyone, a house should be a sound investment product and a foundation for asset accumulation. However, recent phenomena show a forgetfulness of the fundamental value of housing that must not be lost. Severe distortion regarding housing makes it impossible to recognize housing as an industry. Housing is an industry. It must be recognized, nurtured, and advanced as an industry. It should create future jobs and integrate new technologies to provide new workplaces for future generations.

Building houses is not simple. It involves various related industries and is technically world-class. It not only creates jobs and employment but also integrates new technologies, handles national economic production and consumption, and should be exported with world-leading technology. All industries are investing in and supporting companies to achieve global competitiveness and advancement. The government is actively working to revive industries hit by the COVID-19 crisis. However, the housing industry alone is treated like an ugly duckling. According to the International Monetary Fund (IMF) forecast, if South Korea’s economic growth rate remains at 1.2% this year, housing investment could decrease by about 20 trillion won, resulting in the loss of 220,000 jobs. To maintain employment immediately, regulations on the housing industry must be eased. Furthermore, the housing industry should be advanced into a new global export industry.

A house is not a speculative product. It is my and our living space, workplace, and playground. It is a complex space that must serve more functions. It is an asset that should create good quality jobs, incorporate cutting-edge technology, grow into a new industry, and be passed on to the next generation. Let us change the wrong thoughts and perceptions about houses and the housing industry.

Kim Deok-rye, Director of Housing Policy Research, Housing Industry Research Institute

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