Kim Heon-dong, SH President Candidate, Criticized for 2007 Housing Price Stability Evaluation Errors

Seoul City Councilor Park Soon-gyu points to the 2007 housing price drop caused by the US subprime mortgage crisis at the SH Corporation President nominee Kim Heon-dong's confirmation hearing... Claims current housing price rise due to low interest rates and high market liquidity

[Asia Economy Reporter Park Jong-il] Park Soon-gyu, a member of the Seoul Metropolitan Council’s Urban Safety and Construction Committee and the Steering Committee (Democratic Party, Jung-gu 1), clearly stated that the claim made by Kim Heon-dong, the candidate for president of the Seoul Housing and Communities Corporation (SH), during the confirmation hearing held on the 11th of the 303rd regular session?that the 2007 decline in Seoul housing prices was a result of then-Mayor Oh Se-hoon’s housing policies?was not a policy outcome but rather the domestic impact of the U.S. subprime mortgage financial crisis.

Starting with the question, “Is this candidate selection a recommendation as a reward for praising Mayor Oh Se-hoon’s policies?” Park pointed out, “After Mayor Oh Se-hoon won the local election in May 2006, candidate Kim claims that housing prices fell due to Mayor Oh’s policies such as the price ceiling on pre-sale apartments, disclosure of pre-sale cost prices, and long-term rental housing after sale, gaining high public support and shifting the paradigm of housing policy. This is a mistaken claim.”

He continued, “The fundamental reason for the domestic housing price decline at that time was the U.S. subprime mortgage financial crisis. In the early 2000s, following the collapse of the U.S. IT bubble, the 9/11 attacks, and the Afghanistan and Iraq wars, the economy worsened, prompting ultra-low interest rate policies as economic stimulus measures. Many citizens took out loans to purchase homes, but from 2004, inflation caused mortgage interest rates to rise, leading to bankruptcies among borrowers.”

He also explained, “The 2007 subprime mortgage crisis and the 2008 bankruptcy of Lehman Brothers, the fourth largest U.S. investment bank, caused a collapse in U.S. housing prices and a global financial crisis, which significantly affected South Korea,” presenting the cause of the housing price decline at that time.

When Park asked the candidate about Seoul’s population, number of households, and housing shortage, Kim Heon-dong responded, “Citizen groups could not conduct detailed research or surveys due to budget constraints.”

In response to the question, “If you become SH president and are given budget and authority, how long would it take to resolve the housing issue?” the candidate answered, “It usually takes 2 to 3 years to build an apartment, and if land acquisition is required, it will take longer.”

After the candidate’s answer, Park emphasized again, “It takes at least 5 to 10 years to secure land and build housing, so the candidate’s boastful claim of ‘fulfilling the promise of opposition Mayor Oh Se-hoon to reduce housing prices by 50% within one year after his inauguration in 2006’ is a misjudgment and merely reflects the impact of the global financial crisis on the real estate market at that time.”

Park then asked the candidate about the reasons for the recent housing price increases over the past four years. The candidate replied, “The system such as the pre-sale price ceiling did not function properly, and public enterprises sold land at high prices on poor-quality sites, while private companies sold adjacent land at even higher prices, causing the rise.”

In response to the candidate’s answer, Park stated, “The main reasons for the current housing price increase are low interest rates and excess liquidity in the market,” criticizing the candidate’s apartment construction policy extending to the year 200, calling it an unrealistic pledge. He concluded the questioning by saying the candidate’s statements were groundless and that he was not yet prepared to lead a public enterprise.

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