No Effective Measures for Stable Housing Prices... Recycled Policies Centered on Land Lease Models

Democratic Party Likely to Announce Key Housing Policies Around February Next Year
Existing Policies Including Land Lease, Equity Accumulation, REITs
Jin Seong-jun's One Household One House... Experts Say "Denial of Private Property"

[Asia Economy reporters Moon Jiwon and Lee Chunhee] The core housing policy of the Democratic Party's Future Housing Promotion Team, set to be announced in February next year, took shape on the 23rd, but the market evaluates it as far from a measure to stabilize housing prices. Most of the proposals currently under discussion have either already been mentioned by the government or tend to further restrict the free activities of the market.

The Democratic Party's housing policy is expected to focus on measures to prevent unearned income from real estate as much as possible, such as land leasehold housing and cooperative housing. Considering the recent excessive speculative fever in the real estate market, some policies are analyzed to have meaning, but there are concerns that most will struggle to be effective due to limited supply itself and constraints in securing demand.

Experimental Housing Measures for the Common People, Not Universal Policies

The measures under review by the Future Housing Promotion Team are in a similar context to the policy direction recently proposed by nominee for Minister of Land, Infrastructure and Transport, Byun Changheum. Expansion plans for land leasehold housing and equity accumulation-type housing, as well as small-scale reconstruction, cooperative housing, and revitalization of real estate REITs, are widely analyzed as simply gathering the plans already announced by nominee Byun or the existing government in one place.

First, regarding land leasehold housing, which the ruling party and government are enthusiastically reviewing, there is a high possibility of expansion as nominee Byun has repeatedly expressed his determination to push it forward. However, land leasehold requires residents to pay land use fees and forgo capital gains from land price increases, making it difficult to increase demand. The financial burden on developers is inevitably large, so the expansion of volume is also limited.

The market response to public offering REITs and real estate funds that utilize market liquidity is somewhat mixed. Earlier this month, Hong Namki, Deputy Prime Minister and Minister of Economy and Finance, announced at a ministerial meeting on real estate market inspection plans to expand rental housing supply for the middle class through REITs. The intention is to use excess liquidity to expand rental housing, but experts believe it will be difficult to attract general investors' participation as it is not easy to generate profits in a situation where land prices have already risen. The government is also considering imposing tax benefits in light of this.

Small-scale reconstruction and cooperative sale housing are criticized for being projects led more by the public sector than the private sector and being far from the types of housing supply desired by middle-class demanders. In particular, some measures are close to the 'experimental housing' introduced by former Seoul Mayor Park Wonsoon early in his term as part of housing stability policies for low-income residents in aging residential areas, leading to evaluations that they diverge from universal housing policies.

Minister of Land, Infrastructure and Transport nominee Byeon Chang-heum is attending the confirmation hearing held at the National Assembly on the 23rd, responding to questions from lawmakers. Photo by Yoon Dong-joo doso7@

Denial of Private Property Rights? ... Continued Leftward Shift

Equity accumulation-type housing is also evaluated as close to a 'chicken rib' (something of little value). Since sales are made at low prices, the government is likely to impose restrictions such as resale restrictions and mandatory residence periods, conscious of controversies over 'lottery sales.' Industry observers expect a long resale restriction period of over 10 years is likely, given the price benefits.

The government plans not to restrict sales after the resale restriction period ends. Although conditions are better than those of land leasehold with repurchase conditions, if equity purchase is not yet completed, the sale proceeds must be shared with the public according to the equity ratio. Therefore, positive views coexist that it helps low-income groups who lack immediate purchase funds, and negative views that it will be shunned in the market due to rent comparable to mortgage interest, resale restrictions, and mandatory residence obligations.

The ruling party's real estate policy direction is revealed in Rep. Jin Seongjun's attempt to codify 'one household, one house.' The main points are to stipulate in the Basic Housing Act ▲ownership and residence of one house per household ▲priority supply of housing to the homeless and actual residents ▲prohibition of housing use for speculative purposes. The legal community expresses concerns that, even without punitive provisions or mandatory regulations, it could infringe on citizens' property rights and lead to constitutional lawsuits.

Professor Choi Hwangsoo of Konkuk University's Department of Real Estate said, "Housing prices can be controlled by the release of listings, interest rate hikes, and an increase in move-in volume, but immediate effects are difficult except for the release of listings," and suggested, "To control housing prices immediately, a reduction in transaction taxes corresponding to an increase in holding taxes is necessary to encourage multi-homeowners to put listings on the market." Regarding Rep. Jin's amendment to the Basic Housing Act, he said, "It is close to denying private property rights."

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