Principle and trust needed to stabilize Seoul housing

The average price of an apartment sold in Seoul last December topped 1.5 billion won. Put another way, the cost of a single apartment in the capital is equivalent to buying 16 homes in the bottom 20 percent of the national housing market. One analysis estimates that even if a household saved all of its income, it would take nearly 14 years to afford a home in Seoul. For young people and lower-income households with limited assets, the reality is borrowing heavily to buy a home and having little room for consumption while repaying those loans. It is little wonder that a saying has emerged: in Seoul, anyone who does not buy a home becomes “cash rich.” To overcome K-shaped polarization, the country must rein in destructive speculation and stabilize the real estate market.

In recent weeks, Seoul’s housing market has resembled a standoff, with the government seeking to curb demand and expand supply while homeowners aim to secure even higher prices. Transactions have largely stalled, yet short-term surges in asking prices have not meaningfully retreated. Instead, apartment price increases, which had previously slowed, have accelerated for three consecutive weeks, returning to levels seen just before the government announced its Oct. 15 measures last year. President Lee Jae-myung’s frequent social media comments on housing appear closely tied to this growing market unease.

On Jan. 31, President Lee Jae-myung said stabilizing home prices is not impossible if we trust the people and move beyond political calculations, adding that it is no more difficult than restoring mountain streams or achieving a KOSPI 5,000. Addressing owners of multiple homes, he urged them to take advantage of tax incentives while opportunities remain and reduce their holdings. As governor of Gyeonggi Province, Lee had pushed ahead with redevelopment projects that eliminated illegal commercial operations occupying rivers and streams. He has also delivered on his campaign pledge to lift the KOSPI to 5,000. In each case, progress was achieved through advance legal and institutional preparation and administration grounded in clear principles.

The real estate market, long tangled and resistant to reform, can be stabilized only by earning public trust through consistent adherence to the principles of curbing speculation and protecting genuine end users. The housing market is larger than the stock market and involves far more stakeholders than the stream restoration projects. Its legal and institutional framework is also far more complex. If the government presses forward too forcefully, it risks repeating the failures of past administrations, which led to locked-up housing supply, instability in the rental market, and further price increases.

For now, the most urgent task is to manage the market to prevent speculative demand from returning while swiftly implementing the “Jan. 29 measures,” which pledge to supply 60,000 homes in Seoul and the surrounding metropolitan area by 2030. The real estate tax system, so complicated that it has spawned the term “Yang po se,” referring to tax accountants who give up on capital gains taxes, must also be simplified by clearly laying out principles and making the system easier for taxpayers to understand. Only then can confidence take root that there is no need to overstretch to buy a home. As that confidence grows, housing prices are more likely to stabilize.