[Editorial] Looking at real estate measures, one year later

Citizens desperately want to see housing prices stabilized. They feel distraught as they watch prices skyrocket like a tree too enormous to ever be climbed. It has been a year since the government announced its "August 31 Real Estate Measures," which were supposed to be the final product of the government’s real estate policy. However, a year later, housing price stability remains a problem.

Views are highly divergent when it comes to the August 31 Real Estate Measures. The conservative media and those who enjoy privilege in our society insist that all the measures have done is increase taxes without holding back housing prices. That, however, is a deliberate disregard of what the situation would have been had the government’s policy not been in place over the past year. Many factors are contributing to the fact that prices are showing signs of stabilization, but one would be right to say that the government’s real estate policy is the ultimate reason for the change.

It is also short-sighted to debate the immediate effects of measures designed to put a leash on housing prices. What is more significant is that the government has corrected the framework for real estate tax and real estate transactions with measures that improve how property taxes are levied, as well as instituting a program to affix "actual transaction prices" to properties in order to curb speculation. The influence of these measures has only begun to take effect. The newly consolidated "comprehensive real-estate tax" only goes into effect in December. The average tax burden will increase until 2009. The 50-percent transfer tax on households with two or more homes takes effect starting next year. One has to wait a while longer to see how it all will affect the market.

What happens in the years ahead is critical. Resistance to the new property and transfer taxes will only become stronger when people start to see their tax burdens increase. There are attempts to derail the measures in order to stimulate the economy. Even the ruling party is calling for the measures to be relaxed, so you worry whether the government will be able to resist those calls, or will withdraw the measures before they ever fully take effect, a move that would ultimately do nothing more than make the market more immune to policies that attempt to bring things under control. Expectations that real estate policy will change if the Grand National Party (GNP) wins the next presidential election are also contributing to market uncertainty. The GNP needs to take an official stance and formally state what its position is going to be. It is irresponsible and opportunistic for the party to sit back and watch to see what the public wants while hoping to enjoy the popularity that it might reap should the policy fail.

Current real estate policy is, of course, far from complete. Thus far, it has mostly focused on constraining speculative real estate investment. Now that it has put out the fire in the area of speculative demand, the government needs to worry about the outrageous overpricing of apartments. It also has to worry about the supply side, and make sure there are no unnecessary regulations holding back the availability of housing. Now that measures such as the comprehensive real estate tax and a program to reclaim excessive profit from redevelopment projects are in place, other regulations that were hurriedly put into place as temporary solutions need to be removed. Doing away with them would actually serve to maintain the basis of current policy.