Hong Nam-ki "Apologies for Failing to Stabilize the Real Estate Market"

Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki is presiding over the 41st Real Estate Market Inspection Meeting held at the Government Seoul Office in Jongno-gu, Seoul on the 13th. Photo by Kim Hyun-min kimhyun81@

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[Asia Economy Reporter Jo Gang-wook] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, apologized for "failing to stabilize the market" during the last real estate market inspection meeting of related ministers under the current administration.

On the morning of the 13th, at the government Seoul office, Hong opened the meeting with a remark saying, "The government has never been negligent in expanding housing supply," but added, "However, despite these efforts, I sincerely apologize once again for not being able to ultimately stabilize the real estate market."

During President Moon Jae-in's administration, 28 real estate measures were announced. However, soaring housing prices were not controlled, and the government eventually took emergency measures by establishing the Deputy Prime Minister-led "Real Estate Market Inspection Meeting of Related Ministers," attended by ministers from the Ministry of Economy and Finance, Ministry of Land, Infrastructure and Transport, Ministry of the Interior and Safety, and Financial Services Commission, starting August 5, 2020. From the outset, the meeting declared a "war against real estate market disruption," sending a strong message to the market. Nevertheless, over the past five years, the average apartment sale price in Seoul surged by more than 61%, and nationwide, the fluctuation rate was close to 38%. The meeting, which had little significant effect on stabilizing housing prices, was initially held once a week but then reduced to once every two weeks. The 40th meeting (March 23) was held after a month, and the 41st meeting was held three weeks later, showing an irregular schedule. This is also why Won Hee-ryong, the new government's nominee for Minister of Land, Infrastructure and Transport, pointed out shortly after his nomination on the 10th that "many fragmented policies have caused trial and error, public anger, and fatigue."

Regarding this, Hong responded, "Some criticize that there were 28 real estate measures over five years, but only about half of those can be considered comprehensive measures," adding, "The rest were essentially follow-up measures to already announced policies."

Hong evaluated that the housing supply performance over the past five years was higher than that of the previous administration, sending a message to the new government that "there is a view that housing supply will exceed market expectations after 2025 simply by implementing the current administration's measures." He also acknowledged the limitations of the "three lease laws," which President-elect Yoon Seok-youl and the Presidential Transition Committee have cited as targets for reform, stating, "Despite positive effects, some issues such as instability in new jeonse (long-term lease) have been raised."

Regarding the recent real estate market, Hong pointed out that there has been a change in the downward stabilization trend that had continued until the presidential election. Due to the new government's deregulation policies and development expectations, the sale prices and supply-demand indices in the four Gangnam districts of Seoul rebounded first, and as of the first week of this month, Seoul shifted to a stable level, indicating a resurgence of anxiety. This can be interpreted as a subtle conflict between the old and new powers, as seen in the Moon administration's recent refusal of the transition committee's request to exclude multi-homeowners from the capital gains tax surcharge.

Hong emphasized, "It is absolutely important to maintain and spread the recently hard-won downward stabilization trend of the real estate market," and added, "Efforts are expected to continue under the new government as well."

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