Kim Yong-beom, Deputy Minister for Policy at the Blue House, said regarding real estate market policy that "the structure needs to shift in a direction that supports financial soundness."
Deputy Minister Kim stated accordingly on the 22nd on Facebook, noting that in the dwellings market, reliance on "leverage," such as collateral loans used for investment purposes and gap-investment jeonse deposits, is high.
Deputy Minister Kim said, "In the case of purchasing multiple non-residential dwellings using leverage, the revenue in a period of rising prices is privately captured, but in a downturn, risks can be transferred to society as a whole by undermining financial soundness," adding, "This creates an asymmetry in which revenue remains with individuals while risks are socialized."
He added, "What is more fatal than the price adjustment itself in a downturn is that collateral values fall and constrain financial institutions' lending capacity," and "This structure was confirmed during the collapse of Japan's asset bubble in the 1990s, and the essence of the 2008 U.S. subprime mortgage financial crisis was similar."
Deputy Minister Kim also said, "In the current structure, the leverage of multi-home owners has been one pillar of effective demand for new dwellings and of rental supply," adding, "If we only shrink leverage without institutionally collateralizing the medium- to long-term housing stability of households without homes, the structural shift could create new anxieties."
He continued, "Nurturing institutional operators that provide long-term stable rentals, expanding public and quasi-public rentals, and systematically supplying long-term fixed-rate finance for residential purposes can serve as alternative pillars," adding, "Policies that reduce leverage and policies that expand a stable rental base must be designed to avoid conflict and point in the same direction."
Deputy Minister Kim stressed, "Is it really sustainable to maintain, as we do now, a leverage-dependent structure for apartments and non-residential multiple dwellings at the center of credit expansion?" adding, "A credit order that operates on a public foundation needs to be realigned to prioritize residential stability and macro stability."
He concluded, "The order of credit must move away from a structure that amplifies speculative expectations to one that supports both residential stability and financial soundness," adding, "Now is not the time to debate prices, but the time to clarify the principles of credit."