Real Estate Forum Should Mark a Major Shift to an 'Inclusive Housing System'

South Korea is set to hold a national forum on real estate policy, chaired by President Lee Jae-myung, on July 23rd. This event comes at a critical juncture for the nation's housing market, which is experiencing simultaneous increases in both sales and rental prices in the Seoul metropolitan area. The government views this forum as a crucial opportunity to broadly gather opinions from various sectors and concentrate policy efforts on ensuring housing stability and minimizing the number of citizens left behind in terms of housing rights.

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This forum will be a practical discussion to consolidate opinions on issues raised in previous forums.

Kim Yong-beom, the presidential chief of staff for policy, expressed anticipation that the forum will serve as a practical discussion platform to consolidate opinions on issues raised during three previous forums held last week, which focused on supply, finance, and taxation. Following this national forum, the government plans to unveil its tax reform package by the end of July, with further supply and financial measures to be announced subsequently. Previous discussions have explored various solutions, including increased fiscal investment in public rental housing construction, development of urban semi-industrial zones, imposition of macroprudential management burdens on ultra-high-priced housing, reform of property taxes centered on actual residency and housing value, and an increase in the effective tax rate for ultra-high-priced homes. Debates also arose regarding the easing of loan regulations for young adults.

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The government must concentrate policy efforts on minimizing the number of citizens left behind in terms of housing rights.

The government is urged to use this opportunity to transition to a new housing system. A housing system, in this context, refers to a framework where the state manages housing supply and demand to minimize the exclusion of citizens from housing rights. While past high-growth periods saw the government accommodate demand by developing large-scale housing sites, the economic and social structural changes since the 2010s, including low growth, declining birth rates, an aging population, and a surge in single-person households, have rendered this approach insufficient. Compounding the issue, soaring construction costs due to recent wars in Europe and the Middle East, coupled with the real estate project financing crisis and the precarious financial state of public housing institutions, have halved the housing supply in the Seoul metropolitan area.

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It is now imperative to address the urgent housing supply shortage while simultaneously designing an 'inclusive housing system' that ensures affordable housing.

Therefore, it is now imperative to address the urgent housing supply shortage while simultaneously designing an "inclusive housing system" that ensures affordable housing. The government must actively support the expansion of public rental housing, stabilize the rental market, and increase monthly rent subsidies. The article stresses the need to heed the pointed observation by Choi Eun-young, director of the Korea Urban Research Institute, who noted that the Lee Jae-myung administration, over a year into its term, still lacks a housing welfare roadmap. Furthermore, given the extreme asset disparity, policies should prioritize recouping real estate windfall profits and enhancing tax fairness.

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The Lee Jae-myung administration, over a year into its term, still lacks a housing welfare roadmap.