Oh Se-hoon, the Mayor of Seoul, directly criticized President Lee Jae-myung's comments regarding the potential for a "plummet in housing prices," stating that the government's approach to real estate issues is fundamentally flawed.
Oh argued that the President's simultaneous mention of "early mass supply" and "plummeting home prices" does not align with market realities, especially since the government has yet to present a concrete housing supply schedule or execution plan.
On August 31, Oh posted on his Facebook page titled "The President's Perception of Real Estate Reality is Astonishing," stating, "Yesterday, the President mentioned on social media that he is preparing for a potential drop in housing prices due to early mass supply, suppression of speculative demand, and an increase in loan delinquencies and auctions."
Previously, President Lee had instructed the government to prepare a system for mass purchasing homes below a certain price threshold to convert them into public housing if prices were to drop significantly. His plan aims to curb rising prices through early supply and demand suppression while mitigating market shocks by having the government buy homes if prices fall sharply.
In response, Oh remarked, "It is absurd to predict a drop in housing prices, and the basis for this prediction—'early mass supply,' 'suppression of speculative demand,' and 'increased loan delinquencies and auctions'—clearly shows that the President is still not seeing the realities of the real estate market and people's livelihoods."
Oh also expressed skepticism about whether the government's announced supply targets would translate into actual supply.
He stated, "If you think the government's announcement of supply targets, which lacks specific schedules and execution plans, constitutes 'early mass supply,' you are gravely mistaken. Plans that are uncertain even for groundbreaking during the President's term cannot stabilize housing prices or instill confidence in supply for the public."
He added, "Rather than a plummet in housing prices, it raises doubts about whether the government truly has the will and capability to supply housing."
Housing supply is more about the timing of permits, groundbreaking, completion, and occupancy than the quantity announced by the government. In particular, securing large-scale new land in Seoul is challenging, making redevelopment and reconstruction of existing urban areas key supply methods.
Oh believes the government is prioritizing demand suppression through taxes and loan regulations over expanding supply through urban renewal projects in Seoul. He argued that merely suppressing demand in areas with supply shortages may reduce transaction volumes but is unlikely to lead to long-term price stability.
Oh also cautioned against interpreting the recent decline in asking prices for some properties in the Gangnam area as a success of government policy.
He questioned, "Is the President viewing the recent drop in asking prices for some properties in Gangnam as a success of 'suppressing speculative demand'? If he believes that the temporary lowering of prices for some high-end homes ahead of punitive taxes and reduced special tax exemptions indicates a general price decline, that would be a significant misjudgment."
He continued, "In fact, prices are rising in the outskirts of Seoul, indicating a 'price adjustment,' and if this is evaluated as a policy success, it suggests either a misreporting or a denial of reality."
A decline in asking prices for some high-end homes does not necessarily indicate a drop in overall prices in Seoul. Ahead of tax reforms, specific properties may enter the market or adjust their asking prices, but the expectation of price increases centered around Gangnam and redevelopment areas should also be considered.
Oh also offered a different interpretation of the auction market indicators mentioned by President Lee.
He noted, "The President stated that the increase in auction properties due to loan delinquencies is a precursor to falling housing prices. However, an increase in auction properties does not automatically lead to a drop in prices."
He emphasized, "To assess price trends, one must look at the auction success rate alongside the ratio of actual auction prices to appraised values."
According to the July 2026 Auction Trends Report from the auction data firm Jiji Auction, the auction success rate for Seoul apartments in July was 101.0%. Although it decreased by 0.7 percentage points from the previous month, it has exceeded 100% for four consecutive months. A success rate above 100% indicates that properties were sold at prices higher than their appraised values on average.
Oh explained, "The auction success rate for Seoul apartments in July was 101.0%, exceeding 100% for four consecutive months, meaning that despite an increase in auction properties, they are being sold at prices above appraised values."
He asserted, "The auction indicators the President urged to pay attention to do not signal a decline in housing prices but rather reflect strong latent demand and a serious supply shortage in Seoul."
However, relying solely on the auction success rate to determine the overall price trend in the Seoul housing market is difficult. Appraised values are determined before the actual auction date and may differ from current market prices, and there is a significant gap between popular and less popular areas.
In fact, during the same period, the national apartment auction success rate fell to 85.4%, indicating a continued polarization between the Seoul and regional markets.
Oh expressed strong concerns regarding the President's perception of linking loan delinquencies and increased auctions to the possibility of falling housing prices.
He stated, "Not all homeowners putting their properties up for auction are speculative buyers who over-leveraged themselves. Among them are ordinary citizens who have been unable to withstand sluggish domestic demand and high interest rates, as well as self-employed individuals who risk losing their only homes by using them as collateral to secure business funds."
He continued, "The President should not welcome the increase in auction properties as a signal of falling housing prices but should feel a heavy responsibility as the highest authority in the government in the face of the suffering of citizens who have no choice but to auction their homes."
An increase in auction properties can be a leading indicator of market prices, as well as a signal that the debt repayment capacity of households and self-employed individuals has weakened. Therefore, interpreting the increase in auctions solely as a sign of housing price stabilization without distinguishing between excessive borrowing for speculative purposes and livelihood or business-related debts could lead to a misinterpretation of the suffering of the populace as a policy success.
Oh also raised the question of whether President Lee's remarks about falling housing prices were intended to exert psychological pressure on the housing market.
He said, "I cannot help but suspect that there may be another motive behind the President's unrealistic remarks. With no substantial supply measures to announce, is the President trying to instill fear in the market by directly mentioning 'plummeting housing prices' to pressure homeowners into listing their properties?"
The President's comments can also be interpreted as a verbal intervention aimed at lowering expectations for price increases and curbing speculative buying. It serves as a warning not to make hasty purchases, as the government plans to significantly increase supply and suppress speculative demand.
However, emphasizing the possibility of price declines without a foundation of trust in actual supply could freeze the sales market and exacerbate instability in the rental market. Even if homeowners are pressured to sell, if affordable housing is not supplied in desired areas, it will not provide a fundamental solution.
Oh concluded, "Real estate issues cannot be resolved by intimidating the public. Repeating the slogan of 'breaking speculation' will not make the market move according to the government's wishes."
He urged, "The market, which is intricately intertwined with supply and demand, interest rates, finance, sales, and rentals, must be handled with accurate data and a clear understanding of reality. We must stop trying to evade crises with temporary measures and fear tactics."
He added, "It is time to thoroughly reassess the flawed real estate policy framework and adopt a straightforward approach to supply housing where the public wants it. Both the President and the public have experienced enough over the past year. Change is necessary now."
Oh's criticism highlights the direct conflict between the demand suppression policies centered on taxes and financial regulations pursued by the Lee Jae-myung administration and the supply expansion policies emphasized by the Seoul city government through redevelopment and reconstruction.
The debate between the two sides extends beyond 'how to suppress housing prices' to 'how to resolve the housing shortage in Seoul.' The speed at which the government can translate announced supply quantities into actual groundbreaking and the extent to which redevelopment and reconstruction in Seoul will be permitted will likely determine the success of future real estate policies.
* This article has been translated by AI.
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