[Lee·Yoon Pledge Comparative Analysis] "Real Estate Unearned Income Recovery vs Major Deregulation"

Lee Jae-myung, the Democratic Party presidential candidate Photo by Yonhap News

Dissecting Candidate Lee Jae-myung's Real Estate Pledges

Based on the Concept of Land Publicness, Pursuing the Recovery of Unearned Income

Supply of 2.5 Million Homes Including 1 Million Basic Houses

Concerns Over Unexpected Side Effects Due to Strengthened Regulations

Excessive Infringement on Property Rights... Criticism of Intensified Conflicts

Lee Jae-myung, the presidential candidate of the Democratic Party of Korea, summarizes his real estate policy pledges as the recovery of 'unearned income' based on the concept of land publicness. The aim is to prevent the private sector from gaining large profits through real estate speculation or land development. His ideas such as basic housing and the development profit recovery system represent this philosophy. A figure frequently mentioned when discussing Lee's real estate policies is Henry George, a 19th-century American economist. In his book "Progress and Poverty," George argued that private ownership of land intensifies wealth concentration and inequality, and that unearned income from land should be recovered. Lee's campaign includes many 'Georgists' (followers of Henry George). Although Lee has repeatedly apologized for the Moon Jae-in administration's real estate policy failures and seeks differentiation, there is speculation that in terms of regulation, his policies will be a continuation or even an extension of the current government’s approach.

Supply Focused on Basic Housing, Profits Recovered by the Public

The core of Lee's real estate pledges is to limit the profits that the private sector gains during land development and to strengthen the public sector's role in supply. Professor Im Jae-man of Sejong University’s Department of Real Estate, who participated in designing Lee's housing policy, said, "The intention is to change the previous pursuit of 'lottery-like' unearned income from excessive land price increases into a normal structure. Especially for real estate, and land in particular, strong government intervention is necessary."

The supply of 1 million basic houses is in the same context. Basic housing is divided into 'long-term rental type,' where anyone without a home can live at a low price for a long period, and 'land lease sale type,' where the public owns the land and only the housing is sold. At first glance, this seems similar to the pledge of Yoon Seok-youl, the People Power Party's presidential candidate, who promises 2.5 million homes including 'cost-price housing.' However, while Yoon's pledge focuses on private-sector-led supply and somewhat acknowledges residents' capital gains, Lee's emphasis is on the public sector and rental housing, marking a clear difference.

A campaign official from Lee's team said, "If the government does not intervene in real estate, enormous profits will go to specific groups, causing significant deprivation among the rest of the population. It is important to instill the belief that one can earn reasonable income without real estate speculation, thereby boosting the work motivation of youth and the homeless." Additionally, Lee is expected to strengthen related regulations in various areas, such as limiting promotions for public officials owning non-essential real estate and establishing a Real Estate Supervisory Agency.

Concerns Over Regulatory Side Effects and Feasibility

Lee's real estate pledges are an extension of the direction he maintained during his tenure as mayor of Seongnam and governor of Gyeonggi Province. Therefore, concerns about the nationwide application of such pledges have existed for a long time. While the intention to curb real estate speculation and stabilize housing prices is good, there are criticisms that excessive regulatory strengthening could cause unforeseen side effects. Citizens who experienced soaring housing prices due to various real estate regulations such as the three lease laws under the Moon administration are particularly worried about this. Given the expected strengthening of real estate regulations comparable to the Moon administration, conflicts with market participants over lease laws, redevelopment regulations, and price ceiling systems are also expected to intensify.

Senior Research Fellow Doo Sung-kyu of the Korea Research Institute for Construction Industry said, "It seems the focus has shifted from the Moon administration's public-centered policy to controlling and managing all real estate markets. In light of public moral corruption revealed in incidents like the Korea Land and Housing Corporation (LH) scandal and the Daejang-dong case, this direction not only fails to meet public expectations but is also unlikely to help stabilize housing prices."

Feasibility is another issue to consider. For apartments, it generally takes 8 to 10 years from land selection to occupancy, making it realistically difficult to supply 2.5 million homes within a single term. Former Deputy Prime Minister Kim Dong-yeon dismissed Lee's supply plan as "an unrealistic lie."

Considering that the 'Three Land Publicness Laws' promoted during the Roh Tae-woo administration were mostly ruled unconstitutional and abolished, policies related to recovering unearned income also seem unlikely to take root in reality. Even Henry George's theory, which dominated an era, has not seen practical implementation after 100 years. Particularly, the market expresses concerns that establishing a Real Estate Supervisory Agency and strengthening penalties for speculation could stifle private economic activities. This raises fears that an era of 'Real Estate Big Brother,' where property rights are severely infringed under the pretext of housing price stabilization, may be approaching.

Yoon Seok-yeol, the People Power Party's presidential candidate [Photo by Yonhap News]

Candidate Yoon Seok-youl Focuses on Private Sector-Led Supply

Expanding Supply by Easing Redevelopment and Reconstruction Regulations

Amending the Two Lease Laws and Adjusting Officially Announced Price Increases

However, Concerns Over Sharp Price Rises in Early Deregulation Phase

Yoon Seok-youl, the People Power Party's presidential candidate, presents real estate policy pledges that stand in stark contrast to those of Lee Jae-myung of the Democratic Party. While both share the policy goal of creating a 'society without worries about housing prices,' Yoon emphasizes the 'private sector' as the main actor, with the government playing a supporting role. This is the exact opposite of Lee's pledge, which centers on the public sector leading the market and supply.

Yoon has repeatedly argued that the solution to real estate problems is to increase supply while easing regulations to restore market principles. The government should only play a minimal role in housing welfare for socially vulnerable groups and in supporting the normal functioning of the market, leaving the rest to the market. On the 20th, marking one year since the implementation of the November 19th lease measures, he stated, "We will boldly eliminate factors that hinder housing stability," and pledged, "If I become president, I will not treat the people as subjects of reckless policy experiments." This means that if elected, he plans to significantly ease the layered regulations accumulated during the Moon administration.

Recognizing Private Capital Gains... Pledges to Ease Redevelopment Regulations

Yoon's key pledge is the supply of 300,000 'Youth Cost-Price Houses.' These are homes sold at cost price to young people without homes, who must live there for at least five years and then sell back to the government, receiving over 70% of the capital gains. While not fully, this acknowledges a significant portion of private capital gains, reflecting an understanding of young people's desire for 'their own home' that helps build wealth.

Another major pledge is the supply of 200,000 'First Homes Near Subway Stations,' developed through private redevelopment of underutilized national and public lands. The land is publicly owned, and buildings are leased under a land lease system, supplying homes to youth and homeless people at 50-70% of market prices.

Both Yoon and Lee set total supply targets at 2.5 million homes, including land lease and half-price housing, showing some similarity. However, Lee allocates at least 1 million homes under the name 'basic housing,' while Yoon plans to focus about 500,000 homes on vulnerable groups such as youth and newlyweds, with the rest supplied by the private sector, marking a fundamental difference in direction.

Yoon especially promises to ease redevelopment and reconstruction regulations that attract significant market interest. A campaign official said, "We will improve regulations that hinder redevelopment and reconstruction projects, such as safety inspections, housing aging criteria, and reconstruction surplus charges, to activate private housing supply. Areas like Yeouido, Jamsil, and Eunma will show visible results in a short time." If a Yoon administration takes office, a private-led development boom may occur in older Seoul complexes and first-generation new towns like Bundang, which have reached 30 years since completion. Additionally, Yoon plans to adjust the pace of official price increases to reduce holding tax burdens and amend the two lease laws (contract renewal rights and rent caps) to significantly guarantee landlords' autonomy and property rights.

[Image source=Yonhap News]

Potential Instability in Sales and Jeonse Prices During Early Deregulation

The problem lies in concerns over sharp housing price increases due to deregulation. After Oh Se-hoon was elected mayor of Seoul, housing prices rose significantly in redevelopment-promoting areas like Nowon, which supports such concerns. Lee's camp attacks this, saying "Premature deregulation will stimulate the market," but Yoon's camp counters, "Just as traffic worsens immediately after subway construction starts but improves upon completion, housing prices may rise initially but will stabilize in the long term."

Like Lee's basic housing, Yoon's pledges also face skepticism regarding feasibility. For deregulation to lead to housing price stabilization, sufficient annual occupancy must be ensured, but securing land in prime metropolitan areas desired by demanders is not easy. Ko Jong-wan, president of the Korea Asset Management Institute, said, "To prevent pledges from becoming empty promises, detailed plans clarifying supply timing, actors, and regions for both short and long term must be presented, but such explanations seem lacking at present."

Yoon's relative lack of administrative experience compared to Lee, who served as mayor of Seongnam and governor of Gyeonggi Province, is also considered a risk. Although professors like Kim Kyung-hwan of Sogang University, a former first vice minister of Land, Infrastructure and Transport, play advisory roles in Yoon's campaign, Yoon revealed a lack of expertise during the party primary when he answered "I have never made a subscription savings account because I don't own a house" to a question about experience with housing subscription savings.

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