Housing Market Blame Game Continues

Soaring housing prices are a huge headache not only in economics but also in society. Nonetheless, Cheong Wa Dae showed no sense of responsibility for the problem by blaming others for the real estate issue, when most analysts point to the government’s failed policy for the major cause why house prices are skyrocketing.

On November 10, the Office of Senior Presidential Secretary for Public Information posted a commentary on the official Cheong Wa Dae website titled, “The Government to Provide High-Quality Homes in Quantity.” The online commentary read, “Those who purchase homes now will be unable to avoid suffering losses. The problem lies with those who speculate in the real estate market, causing confusion to other market participants.”

It continues to read, “Their movements make those who do not own homes fret whenever there is the slightest change in housing prices. Because they can take huge financial advantage of the speculative housing market, they attempt to distort government policies at every opportunity.” Cheong Wa Dae pointed its blaming finger at the construction companies that fuel speculation in order to earn unfairly high profits, the financial institutions that issue mortgage loans at high interest rates, the real estate agencies that broker illegal transactions, and some in the press that write sensational reports to capture the attention of market participants and readers.

However, some raise questions over the logic of the online commentary citing Cheong Wa Dae’s harsh stance against the increasing of housing supplies in the wealthy Gangnam area.

Throughout a series of postings on real estate, Cheong Wa Dae has been critical of providing more homes in Gangnam. It wrote (in a May 29 article), “Providing more homes in Gangnam feeds the myth that real estate prices in Gangnam never fall and fuels speculation in the market, thereby causing tremendous harm to the real estate market,” and (in a May 18 article), “It is an ungrounded fear that Gangnam is suffering from housing shortages.”

On the same day his office posted the commentary in question, Senior Presidential Secretary for Public Information Lee Baek-mahn explained why the article was written, saying, “We did what we have been doing whenever important issues arise such as the North Korean nuclear crisis. The president did not give instructions about the commentary.”

The commentary posted on Cheong Wa Dae’s official website and other online portals was, within hours, followed by more than 1,000 short replies criticizing the real estate policies of Cheong Wa Dae and the government.

Internet users expressed their anger, saying, “The government is at it again. It’s blaming others for its own problem;” “The real trouble makers in the real estate market are Cheong Wa Dae, the Ministry of Construction and Transportation, the Korea Land Corporation and the Korea National Housing Corporation;” “I can’t but swear. The country is practically a step away from an uprising,” and “Cheong Wa Dae must be serving as a real estate agency.”

Meanwhile, Gerald Schiff, a deputy chief supervising Asia Pacific affairs at the IMF, held a press conference with Korean journalists on November 10 at the government building complex in Gwacheon and told reporters, “It is understandable that people are concerned about rising home prices in Korea. But I don’t think there’s a bubble in the Korean real estate market.”

He called for an expansionary policy, explaining, “Prices rose because supply growth failed to match the growing housing demand.”