Kim Yong-beom, Blue House policy chief, said on the 19th regarding measures to increase real estate supply that "redevelopment and reconstruction are not a magic key." Oh Se-hoon, the Seoul mayor from the People Power Party, is arguing for increasing the supply of dwellings by activating redevelopment and reconstruction, but the point is that this is not a measure that can produce results in the short term. In particular, he said that redevelopment and reconstruction lead to a large exodus of original residents and added, "In the short term, supply actually decreases."
The Deputy Minister appeared on KBS Sunday Diagnosis that day and said, "While redevelopment and construction are important for private demand and supply, this is a matter that must be decided carefully. We need to discuss it comprehensively." He also said, "We can shorten the procedures for redevelopment and reconstruction and have appropriate discussions on floor area ratio, but in theory redevelopment and reconstruction take at least three to five years to reach supply."
He said, "We are in a period when supply is not coming through because of difficulties at a specific time in the past," and added, "We need to get past a period of severe demand-supply mismatch, but if we decide to activate redevelopment and reconstruction, supply decreases further in the short term. The original residents have to move." He continued, "If 30 complexes with 1,000 units each pick up speed for reconstruction or redevelopment at once, 30,000 units will be demolished," adding, "Because redevelopment and reconstruction actually reduce supply in the short term, we need to decide carefully."
He also said redevelopment and reconstruction could fuel "speculative demand." The Deputy Minister said, "If floor area ratio and various incentives in redevelopment and reconstruction are even slightly misdesigned, they can fuel speculative demand," adding, "We need to discuss this comprehensively."
However, he said there is common ground with Mayor Oh regarding the use of quasi-industrial zones in Seoul. He said, "There are several million pyeong of quasi-industrial zones in places like Yeongdeungpo District and Guro District," adding, "After I mentioned it, Mayor Oh went to the site. That's very welcome." He then said, "It doesn't seem like an issue that the Seoul city government can solve on its own," and added, "If we work with the central government, we can achieve much bigger results, so I have also set up a separate meeting with the Seoul mayor. I plan to discuss it with him."
◇"The ownership tax aims at tax fairness, not at listing properties"
President Lee Jae-myung has repeatedly expressed his intention to strengthen the ownership tax on "ultra-high-priced dwellings" and "multiple-home ownership." However, he said the aim is not to curb home prices by increasing the tax burden, but in terms of tax fairness. The Deputy Minister also said in an interview that day, "The purpose is not to impose a tax burden on multiple-home owners to make them list properties," adding, "The goal is tax fairness, and if we adjust the tax system rationally, listings will follow; we are not reviewing taxation with the aim of forcing listings."
On the argument that capital gains tax, which is a concept of transaction tax, should be lowered when strengthening the ownership tax, he said, "We are mindful of that," adding, "We could design it so that selling at an appropriate time is allowed, and after that time the tax burden becomes a bit heavier." However, he said, "It is difficult to say uniformly that if we raise the ownership tax, we must lower capital gains tax."