[Editorial] Nat'l Assembly, Seoul Causing Higher Housing Prices

Korea Realty Information Association has released figures from a study that show how the average per-pyeong price of apartments in Seoul has returned to levels from before the August 31 Real Estate Measures were announced. The rise in housing costs is spreading to regular apartments. The situation is even more reason for concern because it seems to be a typical trend, in which "reconstructed" apartments rise first and then regular apartments quickly follow along in the same upward turn.

As we have mentioned previously on more than one occasion, the Grand National Party's (GNP) opposition to the follow-up legislation on the measures announced August 31 have led to hopes the measures themselves will be watered down and that has been the decisive factor in the return of rising prices. Then there is the fact the Seoul city government and city council relaxed regulations on the storey height of "reconstructed" apartments in Godeok Korea National Housing Corporation ("Jugong") complex #1, and the way they continue to produce policies that could encourage development.

The experts say it will be hard for the trend to continue but the matter is not one you can relax about. The cost of housing is something that is all to easily affected by speculative thinking once an upward trend begins. It is hard to make the trend change direction. The sooner it is brought under control the better. The politicians do not have the luxury of taking their time on the legislation. They need to see that they will face the public's wrath if prices become unstable and the resulting bubble eventually pops.

Seoul's city government must not look at the national problem that is the cost of housing in Seoul as a fire on the far side of a river. As soon as prices seem to stabilize it excites things all over again by unleashing development policies that stir up prices and that is truly hard to understand. We of course do not mean that all policies meant to encourage development are wrong, but timing is important. Even if a policy is a good one, if the timing is wrong it can bring about negative side effects before ever having the chance to be effective. The real estate market is still volatile, like a highly flammable substance. It could flare up with the slightest spark. One hopes officials remember that over half the households in Seoul do not own a single home.

The Hankyoreh, 5 December 2005.

[Translations by Seoul Selection]