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.
Implications: More than challenges associated with managing South Korea’s ties with the United States or North Korea, disciplining Seoul’s housing market remains the issue that consistently catalyzes the most public scrutiny against the Moon Jae-in administration. The soaring real estate market has been a stumbling block for the administration since it took office in 2017. Critics point to its over-regulation of the market as the source of more intense speculative behavior and cost of living inflation for people without homes. As the Moon administration heads into the second half of its five-year term, the failure to address housing price volatility may erode the public mandate it gained in the April 15 legislative election.
Context: The Moon government’s strict real estate regulation draws on the policies of the previous progressive administration under President Roh Moo-hyun. The Roh administration introduced comprehensive real estate holding tax and implemented strong real estate regulations. However, it failed to control speculative behavior in the market. As a consequence, real estate prices continued to rise and created an opening for the conservative opposition to characterize progressive as “economically incompetent.”
Korea View was edited by Yong Kwon with the help of James Constant, Sonia Kim, and Ingyeong Park.
Picture from user Chris Harber on Flickr