Officials Rush to Curb Housing Prices

The government and the ruling party have embarked on preparing comprehensive measures to stabilize skyrocketing realty prices in the Gangnam area in Seoul, Seongnam city, Bundang new town, and Yong-in city in Gyeonggi Province.

They are considering a plan to designate candidates for new towns to replace the Gangnam area during the second half of this year to start development as soon as possible so that more housing can be provided in four to five years at the latest.

As the government and the ruling party are taking prompt action, it is a matter of concern if they are coming up with strong countermeasures to expand housing supplies or suppress realty demand.

The government had a closed-door conference presided over by Prime Minister Lee Hae-chan on this issue on June 13. President Roh Moo-hyun is going to host another conference on June 17 in Cheong Wa Dae to make final decisions.

The Financial Ministry and the Construction Ministry are known to be steering their policy directions toward increasing the housing supply by developing new towns, rather than pursuing the existing short-term policy of restraining demand.

One Construction Ministry official said, “There are three conditions for new town candidates: they should be located in close proximity with Seoul, they should be of a sufficient size to replace the Gangnam area, and they should have no green belt zone in their region.

Financial supervisory authorities have also started to examine housing loan situations by banks and to investigate if the federation of savings banks and insurance companies has increased its loan-to-value rate, violating directives.

Byong-Ki Lee Kang-Myoung Chang eye@donga.com tesomiom@donga.com