President Lee Jae-myung said on the 30th that he had instructed the preparation of a system to purchase in bulk dwellings below a certain standard for public housing holdings in case housing prices plunge. Although Seoul home prices and jeonse prices keep rising and government real estate policy is cited as a reason for the sharp drop in approval ratings, this means the government expects home prices to plunge due to large-scale supply and other measures.
On X (formerly Twitter) the same day, Lee said, "The popular sovereignty government will, by any means necessary, break the ruinous real estate speculation." Lee also said, "Unfair and unreasonable taxes systems that have been shown to fuel real estate speculation will also be corrected, at least in the name of tax justice."
As grounds for forecasting a housing price plunge, Lee cited ▲early large-scale supply ▲suppression of speculative demand ▲a surge in loan arrears and auctions due to high interest rates. Lee added, "Mortgage loan arrears and properties going to auction are increasing significantly. Please also pay attention to the auction success rate," and said, "The government will mobilize all national capabilities not only for financial and tax reforms but also to expand the supply volume of dwellings and to supply quickly."
Lee shared an article that said global investment bank Morgan Stanley had raised this year's Korea GDP growth outlook to 3.4% and that the Bank of Korea (BOK) was expected to raise the benchmark rate to 3.5% in the first quarter next year. Lee went on, "Those interested in real estate speculation should pay particular attention to the part that says 'BOK rate 3.5% in the first quarter next year,' which is six months from now." The point is that when the benchmark rate rises, the interest burden on mortgage loans increases, heightening economic disadvantages.
◇"Seoul capital region dwellings early large-scale supply will be carried out without fail"
Lee also said the government would accelerate the released plan to supply "234,000 units in the capital region." Lee said, "In the short term, the early expansion of dwelling construction is the optimal means to overcome weak domestic demand and the limits of K-shaped growth," adding, "Early large-scale supply of dwellings in the Seoul capital region is a 'both-hands' policy and will be implemented without fail."
Lee added, "The government will mobilize all national capabilities not only for financial and tax reforms but also for expanding the supply volume of dwellings and supplying them swiftly," and said, "In the capital region, especially Seoul, permits and groundbreakings for dwellings have plunged for more than three years since 2022, so we will grant various incentives to expedite permitting and groundbreakings, such as giving district heads the authority to approve projects with 500 households or fewer."
Meanwhile, Cheong Wa Dae and the government have recently clashed with Seoul Mayor Oh Se-hoon of the People Power Party over real estate supply measures at every turn. The Seoul Metropolitan Government argues that the sharp drop in "dwelling permits and groundbreakings over the past three years" is the responsibility of former Mayor Park Won-soon, who was from the Democratic Party. Citing this situation directly, Lee said, "We have increased the staffing in charge of dwellings supply at the Ministry of Land, Infrastructure and Transport (MOLIT), and instructed that any available land, even if small, be identified as much as possible." Lee also said, "We are making it clear to ministries that increasing dwelling supply by even one more unit is both an effective housing policy and a jobs-and-welfare policy worth hundreds of millions of won."
Separately, Lee that morning replaced the ministers of the Ministry of Economy and Finance, the lead ministry for real estate policy, and the Ministry of Land, Infrastructure and Transport. Lee Hyung-il, the current first vice minister at the Ministry of Economy and Finance, was nominated as deputy prime minister for the economy and finance minister, and Hong Ji-seon, the current second vice minister at the Ministry of Land, Infrastructure and Transport (MOLIT), was nominated as land minister. Lee also nominated Democratic Party of Korea lawmakers Lee So-young and Kim Seung-won, former deputy commander of the ROK-U.S. Combined Forces Command Kang Shin-cheol, and Basic Income Party lawmaker Yong Hye-in as candidates for ministers of the Ministry of SMEs and Startups, the Ministry of Justice, the Ministry of National Defense, and the Ministry of Gender Equality and Family, respectively.