Oh Se-hoon, the Seoul mayor, on the 4th said the government's decision to draft next year's budget at a record 821 trillion won is "like pouring the gasoline of liquidity once again on the real estate embers."
The mayor posted on social media (SNS) an article titled "Record-sized expansionary fiscal policy—have you given up on the real estate market?" and stated accordingly.
The mayor said, "The government drafted next year's budget at a record 821 trillion won. It is an 'ultra-expansion budget' that is a full 93 trillion won larger than this year," adding, "Relying on optimism that national tax revenue will increase significantly thanks to a semiconductor boom, they drastically expanded spending from the outset."
He continued, "In fact, government debt is expected to increase by 106 trillion won in a year to surpass 1,500 trillion won," adding, "Instead of using the increased tax revenue to pay down debt and ease the burden on future generations, they intend to boost the money supply by piling on more debt."
The mayor also said the government's expansionary fiscal policy does not match the current domestic economic situation. He said, "Since last year, I have warned that an excessive expansionary fiscal stance amid high inflation and high interest rates could reignite inflation and boomerang to shake the real estate market," adding, "A close look at real-economy indicators shows that the ratio of liquidity in circulation (M1/M2) and the movement of dwelling prices are clearly trending together."
The mayor further said this expansionary fiscal stance will affect real estate prices. He said, "While saying it would stabilize real estate prices, the government has tightened taxes, loans and transaction," adding, "Money has no label. There is no way the money the government releases through expansionary fiscal policy will stay only where the government wants. When liquidity increases, it inevitably affects prices and the asset market."
The mayor added, "In Seoul, where it is difficult to supply enough dwellings to meet demand in the short term, expectations for price gains are growing."
The mayor said, "The National Assembly must scrutinize next year's budget more rigorously than ever," adding, "Boldly strip out vote-buying and consumption-oriented cash-splashing items, and adjust to curb unnecessary expenditure so government debt can be managed. That is the way to prevent the worst real estate market."