[Column] After Building Resistance to Real Estate Regulations... The Government Only Raises the Watchtower Higher

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Joo Sang-don] Real estate market inspection ministerial meetings, joint government rapid response teams for real estate, and task forces (TF) to tackle real estate transaction evasion. These are newly created or expanded and reorganized organizations and meeting bodies monitoring illegal real estate transactions following the government's announcement of the 'Plan to Expand Housing Supply in the Seoul Metropolitan Area and Surrounding Regions.' In addition, starting today (the 7th), the police have decided to conduct a special crackdown for 100 days targeting all illegal activities disrupting the real estate market. In particular, 50 special investigation team members from the intelligent crime investigation units of eight local police agencies overseeing speculative overheated zones and regulated areas will participate in the crackdown. The government is essentially stacking multiple layers of watchtowers to root out market disruption activities that may occur near planned new housing supply sites.

Of course, price collusion, fraudulent subscription, and evasion in housing are illegal. Naturally, they are subject to crackdown and appropriate punishment. However, organizations and systems to crack down and punish these already exist. The Ministry of Land, Infrastructure and Transport, the main agency responsible for housing policy, operates the 'Real Estate Market Illegal Activity Response Team,' which includes the prosecution, police, National Tax Service, Financial Services Commission, and Financial Supervisory Service. The Korea Appraisal Board under the Ministry runs a 'Permanent Real Transaction Investigation Team' of about 100 people, including headquarters and branch offices. They also monitor activities that disrupt market transaction order, such as up/down contracts and price collusion, through a disruption report center. Ultimately, this situation makes it difficult to avoid criticism that the government has mobilized excessive administrative power to send a strong message to the market about its determination to crack down on illegal real estate activities. Increasing overlapping organizations wastes administrative resources funded by taxpayers' money.

The Moon Jae-in administration announced more than 20 major and minor real estate measures over three years, starting with the June 17, 2017, measures. However, the goal of these measures?'housing price stabilization'?was not achieved. The government refuses to acknowledge the failure of its real estate policies and instead shifts the responsibility onto multi-homeowners.

Organizations assigned the mission of 'detecting illegal transactions' inevitably focus their capabilities on achieving this goal. Naturally, the results of illegal transaction crackdowns are likely to increase compared to before. In this case, an inaccurate formula is created: 'Housing price instability is due to disruptive illegal activities in the real estate market.' Without an accurate diagnosis of failure, it is difficult to properly adjust policy trajectories.

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