[Editorial] The Government’s Failed Real Estate Policy

The new development project in Geomdan, Incheon, announced by the government, was initially designed to help stabilize the housing market. The project, however, has resulted in confusion in the market and soaring housing prices. Four days before the government’s official announcement, Minister of Construction and Transportation Choo Byung-jik showed imprudence by revealing the Geomdan development, which fueled speculation in the real estate market. The most affected would be citizens themselves.

There are many cases where the government’s announcements of plans for new cities, some even accompanied with careful preventive measures, have led to real estate speculation. It would be nonsense if Minister Choo, an administrative expert on housing affairs, claims to be unaware of this. Given that the current market conditions are extremely sensitive to money flow and the supply and demand of houses, a single word from the mouths of policymakers can send unexpected and misguided signals. Yet, the person in charge of housing policies made inappropriate and premature remarks, and played a part in the pushing up of housing prices. He should be held accountable for what he has done.

When it comes to policy, formulation and announcement processes are just as important as the actual policy content. Policymakers must take into account the citizens, market conditions, side effects and emergencies. In response to Minister Choo’s controversial announcement, Cheong Wa Dae launched a review and the prime minister rebuked him. Still, the government should do more than that, if the minister in question destroyed positive effects of a government policy, as well as magnified the side effects, to prevent professional standards of some “non-professional” from being further undermined. Otherwise, it would be a far-fetched goal to strengthen a sense of responsibility in the government.

As the government acknowledged, housing policy is not just about providing more houses or stomping upon speculation. It is an area where quality must be ensured because it considerably affects citizens’ standard of living. As a matter of fact, the appointment of Choo as minister was literally a “compensation” for his defeat in the April 17 general election last year. He failed to produce good housing policies, and was only good at revealing the shortcomings of nepotism. He failed to demonstrate decisive leadership whenever important housing issues came along such as the cost revelation of new apartment, balcony extensions, and the parceling-out practices in Pangyo. President Roh’s decision to give Choo a position in his cabinet cost the welfare of citizens.

It is appropriate for Minister Choo to voluntarily resign. Minister Choo would be better off not giving any excuses just as Minister of Unification Lee Jong-seok denied his part of responsibility over the failure of the administration’s North Korea policy. He remarked, “I am leaving not because of the policy failure, but because of political disputes.” The government learned some valuable lessons from the costly failure of its real estate policy. But it has a chance to minimize the negative effects if it takes the right corrective measures on its unrealistic policies, including last year’s 8•31 comprehensive real estate measures and 3•31 countermeasures this year.