The Minister Faces a Deadline, LH Threatened with Survival... Real Estate Policy Loses Momentum

LH Facing Multiple Adverse Factors, Internal Atmosphere Gloomy
Both Ministry of Land and LH Suffer Leadership Vacuum
Public Distrust in 'Gonggong' Deepens in Market
Policy Momentum Declines as Moon's Term Nears End
Need for Uninterrupted Follow-up Measures and Trust Restoration

Minister of Land, Infrastructure and Transport Byeon Chang-heum bowed his head before reporting on urgent issues at an emergency inquiry related to LH speculation allegations held at the National Assembly on the 9th. Photo by Yoon Dong-joo doso7@

"Not only have we lost trust in government policies, but with the minister on a limited tenure, can they really control housing prices properly?"

As public outrage grows over the land speculation scandal involving employees of Korea Land and Housing Corporation (LH) related to the 3rd New Town development, the foundation of housing policy is shaking. In the market, distrust has escalated to the point where sarcastic remarks like "The Moon Jae-in administration's real estate policy is over" are emerging.

Moreover, with Byun Chang-heum, the Minister of Land, Infrastructure and Transport?the control tower of real estate policy?reduced to a 'limited-term minister,' and LH, which oversees policy implementation, facing threats not only to expanding supply but even to its very existence, concerns are rising in the market that the recently stabilized housing prices may become unstable again.

"How can we push policies forward?" Gloomy Ministry of Land and LH

According to sources inside and outside the government, as the scandal over public officials' land speculation allegations shows no signs of subsiding, confusion is engulfing both the Ministry of Land, Infrastructure and Transport (MOLIT) and LH. LH is in a somber mood, compounded by the recent suicides of two employees. MOLIT is also facing a comprehensive crisis after President Moon, on the 12th, effectively imposed a 'limited-term' decision on Minister Byun, instructing him to only oversee the groundwork for the February 4th supply plan before stepping down.

Currently, a full-scale investigation by the government joint special investigation headquarters (합수본) is underway into speculation allegations involving spouses and direct relatives of MOLIT employees, and with the minister’s leadership absent, it has become difficult to fill the operational void. The housing and urban office, which leads the housing sector within MOLIT, has been vacant for a month, and LH has been operating under an acting president system for three months since former Minister Byun moved to MOLIT.

Policy momentum fallen to irrecoverable levels

The government has stated that it will proceed with the housing supply schedule without disruption regardless of the scandal, but the market largely expects this to be difficult. Public redevelopment candidate sites under the February 4th plan are scheduled to be announced this month, but resistance to 'public' projects is growing, and there is a stronger preference for private development.

Concerns are also mounting over the pre-sale of the 3rd New Town, which is set to begin in July. According to a Realmeter survey of 500 adults, 57.9% agreed that the additional designation of the Gwangmyeong-Siheung district as a 3rd New Town should be withdrawn.

Professor Jo Joo-hyun of Konkuk University’s Department of Real Estate said, "The government declared a shift toward supply expansion with a 'public-led' approach, but the market feels there could be problems with this due to the recent scandal. Therefore, the government’s challenge is to restore trust and consistency in its policies. In this situation, the ruling party pushing hastily made related bills by leveraging its majority power could do more harm than good," he pointed out.

Stirring anxiety, housing prices in uncertainty

The problem is that this operational vacuum could negatively impact housing prices in Seoul and the metropolitan area, which had been stabilizing since the February 4th plan announcement. Ko Jong-wan, head of the Korea Asset Management Research Institute, explained, "Leadership is especially needed in difficult times, but with both MOLIT and LH losing leadership, the likelihood of setbacks in problem-solving and policy formulation has increased. Continued government confusion makes market participants more anxious."

In fact, within the industry, concerns are growing that housing prices could rise further as a major negative shock from LH emerges with only one year and two months left in President Moon’s term. On real estate-related online communities, many posts express worries about the impact of the announcement of new public land candidates under the February 4th plan and the pre-sale of the 3rd New Town scheduled for July.

If the perception that policies might fail spreads, it could reignite buying frenzy, especially among younger generations in their 30s, leading to a resurgence of 'panic buying.' A 30-something newlywed, Mr. A, who is waiting for the pre-sale, said, "I thought housing prices would stabilize a bit this year, but hearing that policies might collapse makes me anxious. If the pre-sale is delayed, I might have to consider buying sooner."

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