Implications: Presidential authority lends the South Korean head of state enough political power to make substantial policy advances in their final year in office. Given this opening and ahead of the 2022 presidential election, Moon mentioned adjusting existing policies to curb housing prices during the May 10 speech and press conference. To directly remedy voter dissatisfaction expressed in the recent byelection, Moon discussed potential policies, such as changing mortgage regulations and property taxes to support single homeowners and those who don’t own homes. President Lee Myung-bak was faced with a similar situation after the ruling Grand National Party’s loss in the 2011 Seoul mayoral election. The conservatives interpreted the loss as a show of public dissatisfaction over their responses to debt and unemployment. In response, Lee reversed his economic policies during his final year, supporting social welfare programs and job creation, in an effort to build up support for his party ahead of the 2012 presidential election.
Context: The Moon administration is attempting to directly address the 50 percent increase in housing prices over the last four years. However, adjustments in taxes and mortgage rates will not address underlying inequalities that are fueling the rise in housing prices. With widespread employment insecurities and household incomes diminished by gendered disparities in labor force participation, homeownership is considered a preferred safety net. A solution to the real estate bubble must therefore also address inequities, particularly impacting women and the elderly.
This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.
Korea View was edited by Yong Kwon with the help of Melissa Cho and Alexandra Langford. Picture from the Blue House.