Vice Minister Park Sun-ho: "25% of Housing Purchases from January to May Are Speculative Demand... Need to Strengthen Profit Recovery Measures"

Photo: YouTube 'Sampro TV' capture

[Asia Economy Reporter Kim Yuri] "Among homebuyers from January to May this year, one out of four purchased homes not for actual residence but for speculation and investment demand."

Park Seon-ho, First Vice Minister of the Ministry of Land, Infrastructure and Transport, appeared on the YouTube channel 'Sampro - With the God of Economy' on the 22nd, explaining the reason why the government has issued many real estate measures so far, and responded accordingly. Despite many measures being implemented, speculative demand still exists in the market because the profitability from holding multiple homes remains high, and therefore, the mechanism to recover profits needs to be strengthened.

He said, "Analyzing homebuyers from January to May this year, 16% were those who already owned two or more homes and purchased additional homes, and 9% were corporate purchases. Combined, this accounts for 25%, meaning that more than one out of four homebuyers were not purchasing for actual residence but for speculation and investment purposes."

Vice Minister Park pointed out, "Currently, the profitability from holding multiple homes is too high," adding, "A simulation conducted on several complexes in Seoul showed that after deducting taxes imposed during the purchase, holding, and sale processes, the net annual return was estimated at 10-14%." He explained that if this situation continues, it would be difficult to expect stability in the housing market, and thus, the mechanism to recover profits from real estate investments must be strengthened.

Regarding criticism that the government has strengthened regulations on redevelopment projects that could supply housing in prime areas of Seoul, effectively blocking them, he responded, "There have been no regulations imposed on redevelopment projects at all; rather, we have proposed public redevelopment plans and are promoting their activation," adding, "for reconstruction, we recently announced public reconstruction plans and are looking for pilot complexes."

When asked if lowering housing prices is the government's real estate policy goal, he said, "The recent short-term rapid price increases in some areas have deviated from actual market values," and "there is a need to normalize this, which means downward stabilization."

Regarding the analysis that the implementation of the three rental laws?Jeonse and monthly rent reporting system, rent ceiling system, and contract renewal request right?has led to a rapid shift from Jeonse (lump-sum deposit lease) to monthly rent, he refuted this. Vice Minister Park explained, "Looking at the second week of August's Jeonse and monthly rent statistics, Jeonse contracts in Seoul were 6,000, a 20% increase compared to the same month last year, and monthly rent increased by 12%." He continued, "Although ultra-low interest rates may incentivize landlords to switch to monthly rent, existing contracts cannot be changed without tenant consent," and "Considering the high proportion of gap investment in Jeonse housing and stricter rental income tax on monthly rent, a rapid shift from Jeonse to monthly rent is unlikely."

Meanwhile, he added that the government plans to steadily implement the supply plan of 1.27 million households in the metropolitan area announced so far, aiming to complete all sales by 2028. Except for 90,000 units from redevelopment projects, all other units have specific locations and are concrete. He claimed, "Calculating only for the next three years, 590,000 households can be supplied in the metropolitan area, which means about 197,000 households will be supplied annually," and "the redevelopment units also only include those in the general reconstruction phase after project implementation approval, excluding units included in the public reconstruction plan, so the plan is realistic."

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