[Editorial] When It Comes to Real Estate Market Problems, Netizens Know Better

According to a survey conducted by an Internet real estate agency, 41 percent of participants indicated “the development of Seoul Gangbuk area” as the best solution for the stabilization of house prices in Seoul and its adjacent area, which was followed by “the government’s hands-off policy on the real estate market” (22 percent). Contrary to this, “the relocation of public organizations” and “the increase of the leased apartment supply in Gangnam area” took only five percent each. The 3,500 participants of this survey, netizens who are called Nuriggun, were over 20 years of age and publicized their identification.

On the causes of the skyrocketing house prices in such areas as Gangnam (Seoul), Bungdang (Seongnam, Gyeonggi-do), and Yong-in, 33 percent of those polled pointed out “the imbalance of house supply and demand in certain popular areas,” and 29 percent indicated “the government’s recent announcement of reducing the construction of middle- and large-sized apartments in the Pangyo area.” This is a clear confirmation that the most effective measure for the stabilization of the real estate market is to rely on market mechanisms and that the government policies which ignore market principles ended up with serious side effects such as the polarization of house prices.

The government held a meeting on June 17 and promised the rapid enhancement of living conditions, transportation, and educational environments in the Gangbuk area. In fact, Seoul metropolitan city has been promoting Gangbuk New Town Development Project since 2002 and is also considering the enactment of a special law that allows the injection of national budget money into projects that aim to improve the living conditions and transportation of the Gangbuk area. This initiation seems very plausible because national-level assistance for efficient development of underdeveloped areas such as Gangbuk may serve to give a breakthrough that can tackle the current problems of the real estate market. However, the Ministry of Construction and Transportation that has recently criticized Seoul metropolitan city for dominating the credit of this plan has shifted its position and is showing its disapproval of any large-scale injection of national budget money into the New Town Project. Rather than cooperate for a better outcome, they seem to be only interested in getting an initiative in the coming opportunity.

The government’s lukewarm attitude on the development of Gangbuk area seems to have something to do with its reluctance to admit the failure of its real estate market policies. Recently, Han Duck-soo, deputy prime minister and the minister of finance and economy has stressed that its policy on the real estate market is finally working now by saying, “Only certain large- and middle-sized apartment residences are showing speedy price increases. The price of small apartment residences in most of the locations tends to be stabilizing now.” The government seems to be disguising the polarization of house prices that comes from its reckless policy direction that ignores the difference in living conditions of each region and market mechanisms as the outcome of its success in its policy implementation. This sounds like nothing but advice, saying, “Common people have to live in accordance with their economic status.”

If the government wants to mitigate the infuriation of residents in non-Gangnam areas, it should put more energy into the Gangbuk New Town Development Project rather than adhering to such inefficient measures as controlling housing price in the Gangnam area. As netizens pointed out above, without market-friendly measures which take into account the supply and demand mechanism in the housing market, it will be almost impossible for the government to make up for its previous failures.