The real estate market for the second half of the year has opened with the addition of new land transaction permit areas. Starting July 5, the Dongtan district in Hwaseong, where apartment prices have risen over 11% this year, will now be subject to these regulations. The districts of Giheung in Yongin and Guri City are also included. While some view this as a timely measure to curb overheating in the market, others recall that the expansion of land transaction permit areas during the Moon Jae-in administration was seen as a signal of failure in real estate policy.
Both perspectives have merit. It is unacceptable to ignore areas where home prices are surging in a short period. Measures such as designating regulated areas or implementing land transaction permits are necessary to prevent gap investments and speculative buying. However, regulations are reactive; they can reduce transactions but do not increase housing supply. The upcoming real estate policies under the Yoon Suk Yeol administration must start from this critical point.
Cumulative indicators show that the market is challenging. From January to May of this year, housing completions nationwide fell by 46.7% compared to the previous year, with Seoul experiencing a 41.6% decline. In the rental market, the proportion of monthly rents has approached 70%. What the market feels is not the number of permits or announcements but the availability of homes ready for occupancy. With fewer completions, price pressures in Seoul and the surrounding metropolitan area continue, leaving tenants with limited options.
In this context, relying solely on regulations has clear limitations. Potential buyers are pushed into the jeonse market, and a shortage of jeonse leads to increased burdens from monthly rents. When taxes, loans, and transaction regulations tighten simultaneously, listings become scarce, and demand shifts to neighboring areas. This is why regulations without supply cannot last long.
Fortunately, Lee Seong-hoon has recently been appointed as the new president of LH (Korea Land and Housing Corporation). LH is the key executing agency for public housing supply aimed at youth, newlyweds, and those without homes. While purchasing rental properties is necessary, relying solely on acquiring already built homes cannot fundamentally resolve the supply shortage. The direct implementation by LH, as requested by President Yoon, must now demonstrate its capabilities. Projects such as the third new town, public land development, urban complex projects, public maintenance, and utilization of idle land must be placed on a concrete schedule. LH must pave the way for housing to flow to those who genuinely need it.
The availability of jeonse is decreasing, and the shift to monthly rents is accelerating. If only unstable monthly rents remain in place of jeonse, it is not a market change but a transfer of burden. Alternatives must be prepared to ensure tenants do not suffer while searching for jeonse homes. Guarantees must be provided to prevent fraud, ensure long-term residency, and establish reasonable rental conditions.
Non-apartment supply must also be viewed through this lens. Waiting solely for apartments takes too long. Villas, officetels, and urban-type housing can quickly expand residential options within urban areas. However, in a market where trust has eroded following jeonse fraud incidents, simply increasing supply poses risks. No matter how important speed is, the minimum standards for housing must not be compromised.
The government has announced plans for tax reform. This will be a critical moment for the clarity of real estate policy. Increasing burdens on high-priced homes and speculative holdings is necessary. However, if the same intensity is applied to actual users and low-priced housing, it could exacerbate market polarization. Property taxes should be carefully strengthened for high-value, multiple, and non-residential holdings, while transaction taxes should be lowered to facilitate movement in the market. Homeowners must be able to sell and relocate to allow for price adjustments.
President Yoon has emphasized the protection of actual users. These actual users are not just average households in statistics. They are those unable to find homes due to regulations, waiting in line for jeonse, and cutting back on living expenses due to the burden of monthly rents. A change must be shown so that young people, newlyweds, early-career individuals, those without homes, and vulnerable housing groups no longer suffer due to housing issues. Regulations without supply will not work in the second half of the year. Real estate policy will now be evaluated based on occupancy rather than rhetoric, and on housing costs rather than just principles.
* This article has been translated by AI.
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