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Minister warns against campaign pledges affecting home prices

Jan. 19, 2022 - 14:33 By Kim Yon-se
Real estate agencies at a district in Seoul (Yonhap)
SEJONG -- Deputy Prime Minister and Finance Minister Hong Nam-ki raised the possibility that the housing market could be swayed by pledges of presidential candidates, and suggested he would try to block any speculative actions in particular regions via close monitoring.

During a meeting of ministers in charge of real estate policies on Wednesday, Hong said there are symptoms that “home prices in some regions have been affected by pledges over large-scale development during the presidential race” this month.

“The government is closely monitoring some areas in a serious manner,” he said. He added that stabilization of the real estate market must be the “common aim” of both the ruling and opposition parties, and the incumbent and next administrations.

Candidate Lee Jae-myung of the ruling Democratic Party of Korea and Yoon Suk-yeol of the main opposition People Power Party have been locked in a battle to gain support from voters in Seoul and Gyeonggi Province by unveiling a variety of property-related pledges for the populous metropolitan areas.

Lee’s pledges include land redevelopment and reconstruction of apartments, following Seoul City's stern restrictions of development projects in the mid and late 2010s.

Yoon said he, if elected, would extend the lines of the Great Train Express, to be built in Seoul, Gyeonggi Province and Incheon. He also pledged to create more lines separate from the confirmed ones.

Some real estate agents say that Lee’s reconstruction pledges -- in line with changed stance of Seoul City under Seoul mayor Oh Se-hoon, who took office in April 2021 -- have caused price climbs in some apartment complexes in pricey Gangnam-gu or other districts.

They include some old apartments in Gangnam-gu’s Apgujeong-dong and Daechi-dong.

After Yoon publicized pledges of the GTX line extension, Gyeonggi Province’s Pyeongtaek saw the apartment prices rise 0.04 percent in the first week of January to 0.14 percent in the second week.

Meanwhile, Minister Hong said that home prices in the so-called Gangnam area, composed of Gangnam-gu and three others, have started sliding.

The average trading price of apartments in Gangnam-gu, Seocho-gu, Songpa-gu and Gangdong-gu fell for the second consecutive month -- by 0.05 percent in November 2021 and 0.86 percent in December, he said, citing the Finance Ministry’s data.

He also said that minus 0.48 percent growth was seen in apartment prices in Seoul in December, minus 1.09 percent in the Gyeonggi-Incheon area and minus 0.91 percent nationwide.

The minister expected that prices would go further down. “The Bank of Korea conducted an interest rate hike additionally. The US Federal Reserve has also signaled a rate hike at a faster pace.”

By contrast, a large portion of online commenters have continued to take a skeptical stance. They asked: “Home prices surged by 100-200 percent in just four or five years. Is the recent fall of about 5-10 percent stabilization?”