[Asia Exclusive] "Real Estate Policies Ignoring Experts... Moon Government Is Amateur"

Interview with Kim Hyun-ah, Emergency Response Committee Member of the People Power Party
One Month After the Introduction of the Lease 2 Act: "Market Stability Is an Illusion, Prices Will Surge After Lease Renewals End"
"The Idea of Controlling Housing Prices with Taxes Only Expands the 'Housing Silver Spoon' Class"
"The Real Estate Transaction Analysis Institute Admits Policy Failure"
"Demand Absorption Requires Expansion of Post-Construction Sale System"

Kim Hyun-ah, Emergency Response Committee member of the United Future Party, is being interviewed on the 2nd at the Goyang Dasijak Urban Research Institute in Gyeonggi./Goyang=Photo by Kang Jin-hyung aymsdream@

[Interview = Asia Economy Jeong Doohwan, Head of Construction and Real Estate Department, Edited by Lim Onyu] "People in their 30s today are a generation anxious about the future of labor and their extended old age. In an era of low growth and low interest rates, there is no way to accumulate wealth. This overlapping situation is why those in their 30s are engaging in 'youngkkeun' (borrowing to the max) buying, but simply labeling them as speculative forces is amateurish. The government is completely out of touch."

Kim Hyun-ah, an Emergency Committee Member of the People Power Party, was nicknamed the 'Kim Hyun-mi (Minister of Land, Infrastructure and Transport) sniper' during the 20th National Assembly. This was due to her frequent verbal battles both inside and outside the chamber over real estate policies, criticizing Minister Kim's policies.

Recently, Kim has continued her criticism of government policies through social networking services (SNS). "The fact that the whole country is debating house prices itself is a problem. But looking at government policies makes me so angry that I have to speak out." She defined the government's real estate policies over the past three years as failures, citing a fundamental reason as the 'lack of expertise.' Kim said, "Politics should be handled by political experts, and policies by policy experts, but in the current government's real estate policies, the expert domain has disappeared," adding, "Politicians are ignoring experts and taking reckless steps." She directly pointed to Minister Kim, who is a politician herself.

Kim Hyun-ah, Emergency Response Committee member of the United Future Party, is being interviewed on the 2nd at the Goyang Dasijak Urban Research Institute in Gyeonggi./Goyang=Photo by Kang Jin-hyung aymsdream@

On the 7th, Asia Economy visited Kim's office in Ilsan New Town, Gyeonggi Province, to hear about the problems and solutions of the government's real estate policies.

-It has been well over a month since the introduction of the rent ceiling system and the right to request contract renewal, yet market instability continues. Do you think these systems help stabilize the rental market?

▲It is just politics to cover up market problems such as the sharp rise in jeonse (long-term deposit lease) prices and disappearance of listings until the next presidential election. In the short term, the market may appear stable, but this is just an illusion. After contract renewals end, there will be a bigger side effect with a sharp rise in rent and accelerated conversion to monthly rent.

-You recently criticized Democratic Party lawmaker Yoon Jun-byung, who said 'conversion to monthly rent is not a bad phenomenon,' by telling him to 'try living on monthly rent in Seoul and the metropolitan area.' What are the problems with the shift to monthly rent?

▲We should not look only at the housing market. If the rental market shifts from jeonse to monthly rent, combined with an already unstable labor market, the negative ripple effects will increase. During the past foreign exchange crisis, jeonse served as a buffer for housing stability. Even if someone was fired, they did not have additional housing costs until the jeonse contract expired. But monthly rent is different. If income stops immediately, the moment of unemployment brings housing insecurity.

-Recently, some government officials caused controversy by saying that the 'panic buying' by people in their 30s is due to expectations of rising house prices.

▲That is a ridiculous idea. They are not buying because they expect prices to rise further, but because they are scared prices might rise more.

-With the July 10 real estate measures, the government's real estate tax policies have reached their peak. Do you think the strengthened taxation will stabilize house prices?

▲The idea of controlling house prices through tax policy itself is amateurish. Many multi-homeowners are choosing to gift properties rather than sell them. Ultimately, tax avoidance through gifting only increases the number of 'house gold spoons.' I believe the government's real estate tax strengthening is not unrelated to the state of national finances. I think there is an intention to find new tax sources amid extremely deteriorated fiscal conditions. Blind tax policies could provoke public resistance. They will inevitably face tax resistance not only from multi-homeowners but also from genuine buyers.

-Some argue that the effective tax rate on property holdings is too low and that some increase in rates is necessary.

▲Looking only at property holding tax, the effective tax rate may be low. But this is because the government selectively cited favorable cases from major countries. In countries where the effective property holding tax rate is high, there is usually no transaction tax. However, the government raised both holding and transaction taxes simultaneously. Moreover, with the increase in official property price realization rates and fair transaction value ratios, taxes increase even without raising rates. The problem is that in this process, tax burdens are rapidly increasing not only for multi-homeowners but also for single-homeowners with no significant income after retirement.

Kim Hyun-ah, Emergency Response Committee member of the United Future Party, is being interviewed on the 2nd at the Goyang Dasijak Urban Research Institute in Gyeonggi./Goyang=Photo by Kang Jin-hyung aymsdream@

-There is some evaluation that the supply expansion through the August 4 measures is a somewhat positive policy change.

▲Honestly, it is a disappointing policy. Times have changed, but the government's supply alternatives still remain in the past method of high-density new town development. There seems to be no consideration for the future of cities. In the post-COVID-19 era, homes will be both living spaces and important workspaces. But the new town development plans look just like those from the first generation new towns: building houses and commercial buildings... Moreover, the third generation new towns will be completed at the earliest in seven years. Shouldn't they be built with changes in residential culture at least ten years from now in mind? I doubt there is even a blueprint for the post-COVID era.

-The government says it will not allow unearned income from real estate but notably avoids touching the price ceiling system for pre-sale prices. There is also controversy over lottery-style subscription. Do you think this is effective for stabilizing house prices?

▲If cheap apartments are supplied immediately, there may be a short-term effect in curbing house price rises. But a bigger problem arises: increased social costs due to deterioration in housing quality. Suppliers are not benevolent. They will offer lower-quality products corresponding to the price drop caused by the ceiling system. Additional costs to restore quality will inevitably occur. There is a way to secure housing quality and solve the unearned income problem: expanding the post-sale system. Since buyers purchase completed products, the market will inevitably be focused on genuine buyers who really need housing. Post-sale complexes must have infrastructure like road networks ready at move-in, eliminating the infrastructure shortages seen in the pre-sale system.

-Despite repeated controversies over policy failures, the government continues to strengthen regulations. Recently, it finalized plans to establish the Real Estate Transaction Analysis Institute (tentative name), a market supervision body. How do you evaluate this?

▲The Real Estate Transaction Analysis Institute is essentially an admission of policy failure. It acknowledges that no matter how many measures the government implements, real estate prices have not fallen. Yet, they are trying to compensate for policy failure by establishing this organization.

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