The Moon Jae-in administration announced a new package of measures aimed at reining in speculative real estate investments Wednesday.
The measures included designating all districts in Seoul, the administrative city of Sejong and Gwacheon just south of Seoul as "overheated speculative zones" where tougher taxes and lending regulations are imposed. The government also obliged multiple homeowners to pay higher capital gains taxes and restricted the resale of purchase rights of new apartments.
The new measures the government described as the strongest-ever policy tool to crack down on speculative demand came less than two months after its first package came out in mid-June. This means the first package, which highlighted imposing stricter loan regulations in real estate hot spots, has failed to cool the overheated real estate market.
The new government's struggle to put a lid on rising apartment prices makes one feel a strong sense of deja vu about the previous Roh Moo-hyun administration's total failure in stabilizing home prices. And ominously enough, there is a fear the property market will continue to sizzle during the five-year tenure of the new liberal government.
Apartment prices in Seoul are soaring at an alarming pace. The property zeal has spread from southern Seoul where there are a number of old apartments planned for reconstruction to northern Seoul and the metropolitan area surrounding the capital. Apartment prices in Seoul rose an average 0.57 percent last week compared to the previous week, making it the highest weekly gain so far this year.
It's not difficult to figure out why the real estate market is volatile. On top of ample liquidity arising from low interest rates, there is a chronic shortage of new apartments in southern Seoul and other favored districts. More importantly, there are still more buyers than sellers across Seoul amid popular expectations that the current upswing of the property market will continue unabated.
President Moon's economic aides seem to believe that the overheated real estate market will restore stability if short-term speculative demand is addressed. But it will be wrong if they think apartment prices will be contained merely by myopic regulations targeting speculators. The government should come up with more fundamental and viable measures, including increasing the housing supply.
The measures included designating all districts in Seoul, the administrative city of Sejong and Gwacheon just south of Seoul as "overheated speculative zones" where tougher taxes and lending regulations are imposed. The government also obliged multiple homeowners to pay higher capital gains taxes and restricted the resale of purchase rights of new apartments.
The new measures the government described as the strongest-ever policy tool to crack down on speculative demand came less than two months after its first package came out in mid-June. This means the first package, which highlighted imposing stricter loan regulations in real estate hot spots, has failed to cool the overheated real estate market.
The new government's struggle to put a lid on rising apartment prices makes one feel a strong sense of deja vu about the previous Roh Moo-hyun administration's total failure in stabilizing home prices. And ominously enough, there is a fear the property market will continue to sizzle during the five-year tenure of the new liberal government.
Apartment prices in Seoul are soaring at an alarming pace. The property zeal has spread from southern Seoul where there are a number of old apartments planned for reconstruction to northern Seoul and the metropolitan area surrounding the capital. Apartment prices in Seoul rose an average 0.57 percent last week compared to the previous week, making it the highest weekly gain so far this year.
It's not difficult to figure out why the real estate market is volatile. On top of ample liquidity arising from low interest rates, there is a chronic shortage of new apartments in southern Seoul and other favored districts. More importantly, there are still more buyers than sellers across Seoul amid popular expectations that the current upswing of the property market will continue unabated.
President Moon's economic aides seem to believe that the overheated real estate market will restore stability if short-term speculative demand is addressed. But it will be wrong if they think apartment prices will be contained merely by myopic regulations targeting speculators. The government should come up with more fundamental and viable measures, including increasing the housing supply.
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