Roh’s Real Estate Policies Flunking

Economists gave poor grades in a survey of Roh administration’s various real estate policies devised to curb increases in house prices.

The Citizen’s Coalition for Better Government (CCBG) conducted a survey on 253 people, including economists and real estate professionals, from July 14 through 20. CCBG is planning to hold a forum on July 25 to announce and discuss the results of the survey.

Roh’s Policies Scored 47 out of 100-

The professionals did not agree with the government’s opinion that skyrocketing real property prices were due to “real estate millionaires” or “house price increases in the bubble seven areas.”

Rather, the professionals referred to rash nationwide development policies, floating capital increases, low interest rate, and the shortage of apartments in the Gangnam area.

CCBG gave 30 statements to the professionals, who were required to rate each statement on the basis of five points, including completely disagree (one point), neutral (three points), and completely agree (five points).

Those who give more than three points come under “positive,” but most statements related to the government’s opinion that “real estate millionaires increase house prices nationwide” just obtained below three points.

The professionals expressed that the government’s measure to increase real property holding taxes, including property taxes and composite real estate taxes, would place burdens relatively more on the middle or lower class than on the higher class.

About 43 percent of the respondents said that those who own houses worth 600 million won or more of the government-assessed price would be most disadvantaged by the holding tax increase. Those who own houses worth over 600 million won and one billion won or less were second (40 percent respondents). Only a minority selected between one and two billion won (nine percent), and over two billion won (eight percent). Multiple choices were admitted.

The respondents gave 47.2 points out of 100 to the request for overall score of the government’s real estate policies. They said that increased taxation, including real estate transaction taxes and holding taxes, and various measures for balanced development nationwide were not effective. They also said that the measures did not reflect any professionals’ opinions.

Real Estate Issue Should Count on Market Principle-

The professionals preferred, on the whole, policies based on market principle of “supply and demand,” rather than government’s intervention.

It was increasing the housing supply that the largest number of respondents (33.5 percent) supported for the top priority for house price stabilization. About 31.3 percent of respondents pointed out that it is essential to carry out measures to attract floating capital investment. Only 15.3 percent and 4.6 percent answered for tax increase and house demand control, respectively.

The professionals also maintained that house prices in bubble seven areas would not undergo a large change until the end of 2007, and that the current administration’s real estate policy would not remain unchanged in the next government.

Sang-Rok Lee weappon@donga.com myzodan@donga.com