[Asia Exclusive] Song Seok-jun "In the Remaining Year of Moon Administration, a Two-Track Policy on Housing Market and Welfare Must Be Implemented"

4 Years of Real Estate Policy at D Grade Level
Market Neglect and Suppression Policies... Total Failure
Should Have Addressed Market Demand and Welfare Areas Together

Public-Led 2·4 Supply Plan, Efforts Made but Clear Limits
Ruling Party Must Also Ease Regulations, Comprehensive Real Estate Tax, and Capital Gains Tax

Controversy Over Special Supply for Sejong City Officials
Unfair Phenomenon Caused by Moon Administration's Excessive House Price Increases

Song Seok-jun, member of the People Power Party. Photo by Yoon Dong-ju doso7@

[Interview with Jeong Doohwan, Head of Construction and Real Estate Department at Asia Economy, organized by Reporter Kim Hyemin] "The housing market is a stark reality. The culture of housing demand was not created overnight. However, the Moon Jae-in administration denied this. They perceived housing purchases as greedy speculation and viewed them solely as targets for regulation. Policies introduced over four years with this perspective resulted in tragic outcomes for both homeowners and non-homeowners."

On the 31st, at the National Assembly Members' Office Building in Yeouido, Seoul, Song Seokjun, a member of the People Power Party and chairman of the Special Committee for Normalizing the Real Estate Market, characterized the Moon administration’s four years of real estate policy as a total failure. He particularly pointed out that the failure began with the refusal to acknowledge the market function of housing. By ignoring and suppressing the market, the policies produced results contrary to public expectations and reality.

"With the simultaneous increase in transaction taxes and holding taxes, homeowners cannot sell their properties and are just sitting while being hit with taxes. Did non-homeowners receive good benefits? The increased taxes were passed on to housing prices, and excessive interventions like the right to request contract renewal and the rent ceiling system caused price surges that should not have happened. Every intervention shifted the burden onto ordinary citizens, cutting off the ladder to home ownership and, in a way, a representative route to asset formation."

Song emphasized that the remaining year of the Moon administration should implement a ‘two-track’ policy that complements the market and welfare. He said, "Previous governments have done their best to care for the housing welfare of vulnerable groups while allowing the market to operate autonomously and indirectly supporting smooth supply and demand. We need to proceed consistently and with fine adjustments."

We met Song at the National Assembly in Yeouido, Seoul, to discuss the problems of real estate policy and possible solutions.

- If you were to grade the Moon administration’s four years of real estate policy?

▲ I would say it deserves a D grade. The Moon administration’s policies were immersed in ideology and goals without properly considering the side effects or confusion the policies could cause. Policies have time lags, environmental variables, and can develop unpredictably due to changes in the behavior of economic agents. But they viewed the complex housing market phenomenon too naively. They overestimated that the world would move as intended, and this complacent approach caused misfortune. However, I want to give credit for expanding public rental housing for the housing vulnerable.

- Did the market not flow as the government intended?

▲ Yes. The first mistake was denying the housing market. People’s housing demands have historical roots. As urbanization progressed from traditional houses, various housing types emerged, and during rapid growth, demand for quality housing increased. When supply could not meet private demand, the government stepped in to create new towns and induced supply with bold support. This has been the pattern of Korea’s housing market. But under this government, the perspective on the market suddenly changed. The public could only be confused.

- Then where should the goal of real estate policy be placed?

▲ We need to look at both the area that satisfies market demand and the welfare area where the market alone has limits. The state must not neglect supplying quantitatively and qualitatively excellent rental housing. That is the realm of housing welfare. On the other hand, housing itself has become a representative asset market for Korean citizens. People want to work hard to buy homes through this market and eventually own larger houses. The government should accept these demands and create an ecosystem where quality housing can be smoothly supplied.

Song Seok-jun, member of the People Power Party./Photo by Yoon Dong-ju doso7@

- It seems the government has been pushing supply measures this year.

▲ The government worked hard to present a grand vision and goals for supply in the 2·4 Plan. But relying solely on public-led efforts is problematic. Conflicts between public and private interests are inevitable. Can landowners who are forced to cash settlements accept this? In places like Taereung CC, there is strong opposition from local residents due to environmental rights infringement. If you try to take the easy way using compulsory powers, conflicts with private property and residents’ environmental rights can arise.

- The Democratic Party has also proposed measures such as property tax reductions and expanding the loan-to-value (LTV) ratio for mortgage loans.

▲ I welcome these but there is a long way to go. They have not resolved issues like the comprehensive real estate tax, capital gains tax, or the pace of official price adjustments. They need to ease reconstruction and redevelopment regulations to expand supply and reduce tax burdens to activate housing transactions. The People Power Party announced real estate measures on the 24th focusing on non-homeowners and one-home owner-occupiers, including expanding preferential LTV ratios and acquisition tax reductions.

- Both the government and opposition seem focused on helping young people buy homes. However, some worry that with market interest rates rising and housing prices having already risen significantly, encouraging people to buy now might be risky.

▲ I agree. The housing market may be at its peak, and aggressive chasing purchases could cause significant harm to those buyers. Later, housing prices might fall while financial costs soar, creating a disaster. Considering this, loan regulations should be eased but with measures designed to anticipate side effects. Those with sufficient income can handle financial costs even in a correction phase, but those without lump sums might benefit from eased loan regulations. However, we must be cautious about loosening loans for all demand.

- Meanwhile, the ruling party is moving to establish a Real Estate Transaction Analysis Institute, and in June, the last piece of the three lease laws, the monthly rent reporting system, will be implemented.

▲ The Real Estate Transaction Analysis Institute and the monthly rent reporting system are dangerous moves where the government intends to scrutinize and interfere in every corner of citizens’ housing lives. Even if left to market autonomy, self-correction can work smoothly, but detailed scrutiny and mandatory reporting can cause side effects. The government’s administrative capacity is already insufficient. Creating surveillance for surveillance and then organizations to monitor corruption among officials can lead to a vicious cycle. If you only enforce crackdowns and regulations, there is no room for future-oriented actions.

- For the younger generation, real estate issues seem to boil down to fairness. What is your view on the controversy over special supply for government officials who moved to Sejong City?

▲ It seems to have clearly shown social unfairness to the public. But the unfairness of special supply stems from the government’s failure in housing policy. If the government had initially curbed excessive housing price rises, this would not have been an issue. If Sejong City’s housing prices had been stabilized normally, special supply would have been more encouraged. It was a policy aimed at naturally inducing early settlement to build a new city. But as housing prices surged, cases emerged where people did not actually move in but took capital gains, causing fairness issues. Former Democratic Party leader Lee Hae-chan stirred things up by saying the National Assembly should move to Sejong City and the administrative capital should be relocated, which attracted money there."

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