"Unearned Income-Led Growth" Moon Government Real Estate Policy, Even Progressive Scholars Criticize Fiercely

"Government Cannot Control Market or Prices"

A panel discussion is underway at the symposium hosted by the Seoul Institute of Social Economy (SIES) on the theme "Where Should Real Estate Policy Go?" on the 29th at the Francisco Education Center in Jung-gu, Seoul.

"It is not income-led growth but unearned income-led growth."

On the afternoon of the 29th, the symposium held at the Francisco Education Center in Jung-gu, Seoul, under the theme "Where Should Real Estate Policy Go?" was filled with voices criticizing the Moon Jae-in administration's real estate policies. The event was hosted by the Seoul Social Economy Research Institute, an organization led by the Hakhyun School, disciples of Byun Hyung-yoon, an emeritus professor at Seoul National University and a senior progressive scholar. Their critiques covered everything from the philosophy of the current government's real estate policies to specific regulations and policies.

First, Song In-ho, head of the Economic Strategy Research Department at the Korea Development Institute (KDI), argued that the current government's introduction of the three lease laws (Jeonwolse Cap System, Contract Renewal Request System, and Jeonwolse Reporting System) is fueling housing insecurity.

He said, "The housing rental market is under strong upward price pressure due to the low-interest rate environment, sluggish new supply, strengthened actual residence requirements, and the three lease laws." He added, "In particular, the three lease laws have led to the emergence of triple prices in the market: market price, regulated price, and negotiated price. If the sluggish housing supply continues, it will be difficult for housing prices to stabilize in the short term."

Professor Lee Sang-young of Myongji University stated, "The three lease laws and the reduction of benefits for private rentals have ultimately increased instability in the rental market, such as the surge in Jeonwolse prices." There were also calls for urgent regulation of reckless gap investment practices. According to Seoul City's funding plan, the gap investment ratio reached 43.5% this year.

Criticism also continued against demand suppression policies such as strengthened capital gains tax and loan regulations. Professor Won Seung-yeon of Myongji University evaluated, "The current government's policies to suppress housing demand through tax increases and loan regulations have only resulted in temporary price stabilization." He added, "Ultimately, the failure of real estate policies has led to damage to vulnerable borrowers, low-income groups, and the homeless, rather than systemic risk."

Professor Won urged a shift in perspective on the market, stating, "The government must recognize the limits of controlling the real estate market and prices." He said, "An important lesson from the Moon Jae-in administration's real estate policies is that suppressing real estate prices cannot provide the public with a stable housing welfare environment."

Recently, apartment prices have surged sharply not only in Seoul but also in Gyeonggi and Incheon, with the top 20% of apartments in the metropolitan area approaching an average price of 1.5 billion KRW. This figure, which was around 720 million KRW at the start of the current administration, has more than doubled in 4 years and 4 months. The photo shows apartments in Yongsan-gu and Seocho-gu, Seoul, as seen from Namsan, Seoul, on the 7th.

The alternatives converged on unearned income recovery and the supply of rental housing.

Professor Lee Sang-young proposed, "Alternatives are needed to increase homeownership rates, such as expanding low-interest public loans and land lease housing centered on the homeless and first-time buyers."

Professor Won said, "The core is to alleviate housing insecurity among young adults in their 20s and 30s who are just starting their social lives and to support them in eventually owning their homes." To this end, he said, "The proportion of public rental housing should be expanded to over 20%."

Professor Jeon Gang-su of Daegu Catholic University advocated abolishing the comprehensive real estate tax and instead introducing a land holding tax linked to basic income. He explained, "The net increase in tax revenue from the introduction of the land holding tax can be distributed as basic income (land dividend) equally to all citizens."

There were also calls to supplement the three lease laws to strengthen tenant housing stability.

Professor Na Won-jun of Kyungpook National University said, "The exercise rate of the contract renewal request right is not high," and added, "It is necessary to limit the landlord's reasons for refusing contract renewal." Even if tenants exercise the contract renewal request right, the right becomes invalid if the landlord claims actual residence. Therefore, in practice, landlords frequently use the unverifiable claim of actual residence as a 'trick' to refuse contract renewal.

Professor Na said, "It is also worth positively considering introducing the Jeonwolse Cap System (limiting rent increases to within 5%) for new contracts."

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