Home prices in Gangnam, Seoul, are once again on the rise. In key areas such as Banpo, Apgujeong, and Daechi-dong, record-high transactions are occurring. Some complexes have seen price increases of tens of millions of won in just a few months. As a result, there is growing interest in the new government's additional real estate measures. President Lee Jae-myung has also hinted at the possibility of further actions, stating, "Real estate prices are excessively high."
However, if the government begins to target Gangnam home prices as a policy goal, the market will once again become a political issue. The real problem that the government needs to address is not the prices in Gangnam, but the housing instability felt by the public.
First, it is essential to clarify the reality of housing instability. The anxiety that citizens feel today is not solely due to the high prices of apartments in Gangnam. Young people are losing hope of owning their own homes. Newlyweds are struggling with the burden of jeonse (long-term lease) and monthly rent. The middle class is torn between concerns about their children's education and housing issues. Retirees are worried about rising housing costs. Coupled with jeonse fraud and uncertainties in the rental market, housing instability has become one of the biggest burdens in people's lives.
Policies should focus on resolving this issue.
Of course, this is not to say that we should ignore Gangnam home prices. Real estate in Gangnam still serves as a benchmark for the Seoul housing market. When prices rise in Gangnam, the upward trend spreads to nearby areas, which in turn affects the rental and sales markets across the metropolitan area. There is a certain connection between Gangnam home prices and housing instability.
However, making the control of Gangnam home prices the primary policy goal is problematic. The prices in Gangnam are not just simple housing costs; they are the result of decades of accumulated factors such as education, transportation, healthcare, culture, proximity to workplaces, and social preferences. While supply is limited, demand remains steady. Attempts to control such a market solely through taxes or regulations have historically failed.
In fact, past governments have employed various policies, including strengthening the comprehensive real estate tax, increasing capital gains tax, and imposing lending and transaction regulations, to suppress Gangnam home prices. While some measures were effective at times, they ultimately resulted in cycles of price increases and decreases without addressing the fundamental issues.
That said, it is not necessary to conclude that all regulations have failed. Expanding the supply of public rental housing and supporting vulnerable groups in housing have yielded certain results. The problem lies in the fact that policies focused solely on price suppression have not changed the structural demand of the market.
So, what is the solution?
First, there needs to be stable supply. However, we should not view supply expansion as a panacea. Easing regulations on reconstruction and redevelopment could stimulate market expectations in the short term, leading to price increases. This could also exacerbate housing instability for existing tenants. Therefore, the direction of supply expansion is more important than the speed. Quality housing supply for actual demand, increased public housing for young people and newlyweds, and the expansion of long-term rental housing should be pursued together.
Second, we must restore the housing ladder. The most serious issue now is that young people and the middle class are losing hope of being able to buy homes through their efforts alone. Housing policy should aim not just at price control but at providing citizens with predictability for their future.
Third, we need to address the issue of concentration in the metropolitan area. The essence of South Korea's real estate problem is not the houses themselves but the movement of people. Because good jobs, education, culture, and healthcare infrastructure are concentrated in Seoul, people flock there. The rise in Gangnam home prices is more of a result than a cause.
While some regions face serious population decline and unsold properties, Seoul worries about a lack of supply. One area has surplus housing while another faces shortages. This is not just a failure of real estate policy but a failure of national balanced development.
Ultimately, housing policy must be linked to industrial policy. If we cannot change the structure that concentrates advanced industries like AI, semiconductors, biotechnology, and future mobility in Seoul, it will be difficult to resolve the concentration of housing demand. Regional hub cities like Daejeon, Gwangju, Daegu, Busan, Ulsan, and Jeonbuk must develop quality jobs and innovation ecosystems to disperse both people and businesses.
The way to surpass Gangnam is not to suppress it but to create more cities that are as livable as Gangnam.
If the government is preparing real estate policies, it should not be trapped by the political symbolism of Gangnam home prices. What the public desires is not a drop in prices in a specific area but a stable life. A society where people can have hope for home ownership, live without worrying about rent, and enjoy good job and educational opportunities in their regions is a true housing stability society.
The foundation is housing stability. The principle is to protect actual demand. The common sense is to focus policy efforts not on fighting home prices but on reducing public anxiety.
The government should not focus on Gangnam home prices but on the housing instability faced by the public. The solutions lie not only in regulation and taxation but also in supply, balanced development, and regional growth strategies.
This approach will not only address real estate issues but also enhance South Korea's future competitiveness.
* This article has been translated by AI.
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