Experts Give "4 out of 10"... Unified Criticism of Real Estate Policy

Direction of Supply Shift is Correct but Timing and Content Both Inadequate
Tax Strengthening and Regulation of Lessees Encourage Listing Freeze

[Asia Economy Reporter Kim Hye-min] The government attempted a policy shift focused on expanding supply starting with the February 4 real estate measures this year, but experts unanimously agreed that both the timing and content were ‘insufficient.’ While the direction was good, they viewed that immediate supply would be difficult and would not help stabilize housing prices in the second half of the year. In particular, the strengthened tax regulations on multi-homeowners and the reduction of benefits for rental business operators were evaluated as rather encouraging the withholding of listings.

On the 28th, the real estate market and policy experts gave the government’s real estate policy performance for the first half of this year an average score of 4 out of 10. Four experts gave a score of 3, the most common rating, and Kim Hak-ryeol, head of SmartTube Real Estate Research Institute, harshly criticized it, saying it was difficult even to give 2 points. Ko Jong-wan, president of the Korea Asset Management Research Institute, who gave 6 points, also said it was "just enough to avoid failing."

Over the past four years, the Moon Jae-in administration, which implemented strong regulations mainly targeting multi-homeowners, shifted its focus to supply this year. Representative examples include the announcement of the Urban Public Housing Complex Project and public-led redevelopment and reconstruction in February, and the monthly selection of candidate sites. Despite speculation controversies involving employees of the Korea Land and Housing Corporation (LH), the government continues to send supply signals, stating there are no setbacks in the 3rd New Town plan.

Experts viewed this policy shift positively but expressed regret that it was late. Jang Jae-hyun, head of the Research Division at RealToday, said, "Although the public sector belatedly stepped in to undertake maintenance projects, redevelopment and reconstruction do not happen immediately," adding, "It will take about 10 years to have a practical effect on stabilizing housing prices through housing supply." Ko Jun-seok, adjunct professor at Dongguk University Law School, also took a reserved stance, saying, "There are many announcements about supply, but no actual construction has started," and "If the measures are not implemented quickly and at least one successful model does not emerge, they could become meaningless."

Some experts rated the feasibility of the policy itself as low. Seo Jin-hyung, president of the Korea Real Estate Society, said, "Public-led projects on someone else’s land involve many variables," adding, "Pilot complexes may be promoted, but there is no guarantee that they will be continuously pursued afterward." Shim Kyo-eon, professor of real estate at Konkuk University, pointed out, "The government is excessively interpreting land expropriation rights, so it will be difficult to get cooperation from landowners," and said, "The method itself has limitations." Experts also viewed the easing of loan regulations mainly for non-homeowners as unlikely to have a significant effect.

Meanwhile, policies that still do not consider market acceptance, such as the implementation of strengthened holding tax and capital gains tax regulations on multi-homeowners starting this month, were criticized. Park Won-gap, senior real estate specialist at KB Kookmin Bank, said, "The capital gains tax regulation on multi-homeowners blocked additional buying demand but on the other hand prevented the supply of listings, causing housing prices to rise stepwise and creating market instability." Ko Jong-wan, president of the Korea Asset Management Research Institute, also criticized, saying, "Unless incentives for multi-homeowners to list properties are introduced, the withholding of listings will not be resolved, and there is still no measure to calm the impatience of non-homeowners."

In particular, the abolition of benefits for non-apartment rental business operators such as villa landlords was evaluated as a decisive misstep. Although the government decided to reconsider from scratch due to concerns that affordable jeonse and monthly rent listings would further decrease, experts strongly criticized the government’s wavering policy direction. Kim Hak-ryeol, head of SmartTube Real Estate Research Institute, sharply criticized, saying, "They tried to abolish even measures for ordinary citizens without basic consideration of why the system was created." Doo Sung-gyu, senior research fellow at the Korea Construction Industry Research Institute, also pointed out, "Considering the various processes so far, it is difficult to have confidence in the current government or ruling party’s real estate policies."

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