[Editorial] Timing Does Matter for Pangyo Policy

The government announced measures for stabilizing the real estate market of the capital area, which include the collective sale of Pangyo New City residences in November, which originally were planned to be sold at four different times starting from June this year. In order to rein in speculation of middle and large sized residences, the development rights will be given to the construction company whose bid is the highest in note bidding price, and the lowest in estimated sale price.

The new policy will stabilize the overheated real estate market around Pangyo and the neighboring area. But side effects seem inevitable. While the bidding system combining bond and sale price will surely contribute to price control, it can also lead to fraudulent construction work. Since collective sale policy can also bring the shortage of construction material supply, a wise supply plan by the government will be critical.

Suppressing demand without increasing supply does not work for long-term real estate market stabilization. In order to increase residence supply, government plans to develop Yangju, Namyangjoo and Samsong as new residence areas, but they are not enough to disperse excessive demand centered on the southern Seoul area.

The safety measures the government suggested, including intensifying construction audit process and shrinking the level of apartment height control, can be effective in the short term. In the long term, however, those measures may shrink supply, which will lead to a price increase. It is desirable that the government lifts excessive regulations against the reconstruction effort once the initial purpose of tackling speculation is achieved.

It seemed too early for the government to announce that it will not allow the reconstruction into ultra-high-rise apartment buildings within certain premium residential areas of Gangnam. While the government insists that constructing those skyscraper apartments will lead to unstable residence prices, depriving neighbors of the right to enjoy sunshine, deteriorating living condition, and forging exclusionism of high society, many people have different opinions. The government should consider the high-rise apartment project as an opportunity to beautify city outlook and upgrade the quality of living.