1. The Effects of '8.2(August 2) Real Estate Policies' and future prospects
KOREA REPORT(2017, #2)
The Effects of '8.2(August 2) Real Estate Policies' and Future Prospects
1. The Effects of '8.2(August 2) Real Estate Policies' and Future Prospects
□ The Moon Administration implements '8.2 Real Estate policy measures' to extirpate speculation and stabilize real-estate market for the middle-class buyers.
○ The Moon Administration announced essential policies regarding the overheating of ‘real estate market', which include △ designation of ’speculation zones’ and ‘overheated speculation areas,’ △ imposing tighter regulation on loan, △ increasing capital gains tax(CGT), and △ expanding the supply of public rental housing.
- Cutting off the speculation by imposing tighter regulations on the LTV(loan-to-value ratio) and DTI (debt-to-income ratio) in designated 'speculation zones' and 'overheated speculation areas' and limiting the resale of ‘apartment purchase contracts’
- Through the consolidation of taxation system of CGT for those who own multiple houses, the government will oversee the transparent and fair real estate market.
- Bring about stable housing for the middle-class by expanding the supply for rental housing (public rental housing with supply of 170,000 houses) and revising the housing subscription system
→ These policies reveal that the utmost priority of the Moon Administration's real estate policies is to guarantee stable housing for the middle-class and protecting those who are in actual need for housing, rather than to exploit the real estate market as stimulus for economic boost.
□ Fast stabilization of the real estate market after two weeks of '8.2 Real Estate Policies'
○ As a result of cutting off the financial resources for speculation by imposing strict regulation for loans and instigating lease registration for the multiple-house owners, the overheated real estate market is steadily cooling down.
- Some signs of the dropping of real estate price: The price of apartment in Seoul declined for the first time in seventeen months; Some to-be-reconstructed apartments in Gangnam lowered their sales prices.
- For the government relaxed the loan regulation for those who are in actual need for housing, there was almost no negative impact on the middle-class buyers from these measures.
○ ‘8.2. Real Estate Policies’ aspires for long-term fundamental structural changes of the real estate market, by barring the potential speculation attempts from interfering healthy operation of the market.
- The government has made clear that, in case the 8.2. measures prove to be insufficient in extirpating the speculation, it will implement additional, highly intensive measures.
- Additional measures include: controlling of household debts (end of August); announcing the ‘Roadmap for housing welfare’ (September), among others.
- Minister of Land, Infrastructure and Transport Kim Hyun-mee stated that, "After conducting rigorous analyses on the changes in real estate market, the government will decide on the implementation of additional measures which may include the imposing of higher property taxes."
□ '8.2. Real Estate Policies’, which reflects the Moon Administration's adamant will to “stabilize real estate prices at any cost,” must be meticulously and consistently carried out based on the people's overwhelming support.
○ Despite negative responses by some of the media reports and experts, the people have shown overwhelming support for ‘the 8.2. Real Estate Policies measures’
- 71.8% approving of the '8.2 Real Estate Policies' (The Hankyoreh August 14)
- About 70% responded positively toward the increase in property tax (Realmeter August 10, The Hankyoreh August 14).
○ In order to transform the real estate market from the mere means to stimulate economy to the one that centers around the people who are in actual needs, the government must maintain the basic elements of these policies over the next five years.
- It is important that the government does not respond too sensitively to the negative voices that express alarming concern toward 'cooling of real estate market' and 'economic stagnation'; instead, it is crucial to convince the people that they are eligible for fair-priced, high-quality housing, and also to assure them of the extirpation of speculation and the stabilization of real estate market.