Lee Jae-myung: "Now is the Opportunity for Real Estate Market Stabilization"...Proposes Solutions via SNS

[Suwon Ilbo=Reporter Park No-hun] Gyeonggi Province Governor Lee Jae-myung has proposed measures including expansion of long-term public rental housing and strong regulations on non-residential housing to stabilize the domestic real estate market.

Governor Lee announced this on the 8th through an SNS post titled "Real Estate Stabilization...The Only Answer is Strong Regulation of Non-residential Housing and Expansion of Public Rental Housing."

The governor said "Surprisingly, the solution is simple. Reasonably protect housing for actual residence and supply affordable, quality housing, while imposing strong regulations on non-residential housing such as high taxation that makes unearned income impossible and withdrawal of financial benefits," presenting two solutions.

One is the expansion of long-term public rental housing, and the other is the land transaction permit system targeting foreign nationals and corporations as a strong regulation measure for non-residential housing.

After explaining these two measures, the governor concluded, "If we have found a solution to overcome an abnormal market, we must not miss the opportunity. Real estate market normalization—now is the opportunity."

The following is the full text of the governor's SNS post.

<Real Estate Stabilization...The Only Answer is Strong Regulation of Non-residential Housing and Expansion of Public Rental Housing>

In the past Joseon Dynasty, hoarding and price manipulation were prevalent and were strongly regulated. People would buy up major goods from around the country and when they became scarce, sell them in the market at high prices. The same thing is happening in South Korea today. Recently, apartment prices have hit their maximum increase in four months, and approximately 478,000 people competed for about 1,000 apartments in the Gwacheon area, recording a maximum ratio of 1,812 to 1 (average 458 to 1). Real estate speculation is pushing those without homes into deep suffering.
A society that deprives people of the fruits of their labor through monopolization of wealth rather than fair reward for work or competition has no hope. The real estate speculation and unearned income problem in South Korea is even more serious because it is causing people, especially young people, to give up on having children and marriage.
However, surprisingly, the solution is simple. Since the market has already reached 100% housing supply rate, stability can be found through appropriate supply and regulation alone. Housing for actual residence should be reasonably protected and affordable, quality housing supplied, while non-residential housing should face strong regulations such as high taxation making unearned income impossible and withdrawal of financial benefits.
First, expansion of long-term public rental housing such as President Moon Jae-in's "Lifetime Housing" and Gyeonggi Province's "Basic Housing." If high-quality public rental housing in good locations suitable for the middle class is supplied so people can live comfortably, there would be no need to go into debt to buy expensive homes, and unnecessary speculation and panic demand would disappear. Singapore, which has similar conditions to our country, has already proven this.
However, while Gyeonggi Province plans to supply 50% of housing in the third new cities as "Basic Housing," regrettably, the quantity falls short of stabilizing the real estate market and balancing supply and demand. Supplying middle-class rental housing that people can live in for life is also President Moon Jae-in's wish. We earnestly recommend to the government the expansion of basic housing.
Second, the land transaction permit system targeting foreign nationals and corporations as a strong regulation measure for non-residential housing. According to Korea Appraisal Board, foreign nationals and corporations' building transactions reached 82,162 cases in the capital region through August this year, and foreign nationals' domestic apartment transaction amounts totaled 1.2539 trillion won (3,514 acquisition cases) through May, an increase of 413.2 billion won (49%) compared to the same period last year. As Gyeonggi Province is currently pursuing this but concerns over a spillover effect in neighboring areas exist, government review of expanding the land transaction permit system to the capital region is absolutely necessary.
If we have found a solution to overcome an abnormal market, we must not miss the opportunity. Real estate market normalization—now is the opportunity.