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Real estate worries on both sides of the aisle

Dec 19,2019
The Moon Jae-in administration’s latest measures to cool off real estate prices faced immediate criticism from the opposition. Now ruling party politicians are worrying that they may alienate middle-class voters ahead of April’s general election.

“The latest announcement was the 18th of its kind since Moon took office, but all measures have actually pushed real estate prices to skyrocket,” Chairman Hwang Kyo-ahn of the main opposition Liberty Korea Party (LKP) said at a party leadership meeting on Wednesday.

“Only a few are benefiting from the government policy, and they are the former and current presidential aides at the Moon Blue House. Prices of their properties stabilized, while the people’s situation is worsening. This is absurd.”

Hwang’s criticism was based on a recent analysis by a civic group that prices of properties owned by former and current presidential aides have largely increased since Moon took office.

The Citizens’ Coalition for Economic Justice said 65 former and current presidential aides together owned properties worth 74.3 billion won ($63.6 million) as of November. Since January 2017, the prices of their properties went up an average of 320 million won, it said.

Other LKP leaders joined the attack. “The government is just passing the buck to the innocent people,” Rep. Shim Jae-cheol, floor leader of the LKP, said. “The new measures are burning down the socioeconomic ladder and forcing people to give up their dreams of becoming homeowners.”

Rep. Kim Hyun-ah, a real estate policy expert, said she will come up with a properties ownership tax calculation program and make it public in order to alert property owners that they will face higher tax payments in the coming months.

“The government said last year it would increase the tax rate,” Kim said. “They presented yet another plan to increase the tax rate this year. For the Moon administration, the people are nothing more than ATMs that spit out money.”

The Bareunmirae Party dubbed Monday’s measures a “dropping of bombs.” Its Rep. Joo Seung-yong, who is serving as deputy speaker of the National Assembly, said the Moon government is completely failing in its policy. “They have announced real estate measures 17 times so far, and that in itself shows something is wrong,” he said Wednesday. “The government is now going after larger tax revenues in order to counter hostile public sentiment.”

Even the ruling Democratic Party (DP) is complaining about the latest measures. The party hosted a consultation with Land, Infrastructure and Transportation Minister Kim Hyun-mee on Wednesday and criticized the policy.

“Affordable homes for people who need them must be supplied in Seoul,” Rep. Youn Kwan-suk, deputy chief policymaker of the DP, told Kim during the meeting.

Other DP lawmakers complained the ruling party was sidestepped during the policy-making process. “The government did not consult with the party in advance,” a DP lawmaker told the JoongAng Ilbo.

“The measures were focused on suppressing speculation, but it is actually a time to deal with problems associated with suppliers,” said another DP lawmaker. “I will propose a separate measure later this month with a longer-term perspective different from the government’s policy.”

DP lawmakers whose districts are in Seoul and directly hit by the latest real estate measures could not hide their frustration.

“It is true that we need to put out an urgent fire [in the real estate market],” a lawmaker whose district is in the northwestern part of Seoul. “But the latest measures are a short-term policy. In the long run, we will see undesirable consequences. We’ve always seen a balloon effect in non-regulated areas when we try to control real estate prices.”

Other DP members planning to run in April for the National Assembly were even more upset. “The government must not try to stop a natural hike,” said a DP politician who registered his candidacy on Tuesday.

“The government didn’t pay attention to the reality of the middle class,” another politician considering a bid in the Gangnam area of southern Seoul said. “Even if there is an apartment in Gangnam priced at 1.5 billion won, who in the middle class can possibly buy this [without a loan]?” he asked, challenging the latest ban on loans for high-price apartments.

According to the newest measures, mortgages are banned for apartments worth over 1.5 billion won in speculative and overheated areas starting Tuesday. The loan-to-value ratio for a mortgage for a residence valued from 900 million won to 1.5 billion won will be cut from 40 percent to 20 percent.

“Whether owners of multiple properties will sell off properties or not will decide the success of this policy,” said Rep. Youn. “And the fate will be decided during the first half of next year.” That period overlaps with the campaign period for the April general election. “If real estate prices are stabilized before the election, we will see a victory, but if not, it will backfire greatly,” said a lawmaker whose district is in the capital region.

BY SER MYO-JA, HA JUN-HO [ser.myoja@joongang.co.kr]