Survey Shows Failure of Many Government Policy Packages

Among policies to tackle real estate speculation since the beginning of current government, the so-called reconstruction stabilization measure with the increase of mandatory construction ratio of small sized housing, announced on September 5, 2003, was considered one of the worst negative effects according to professors and researchers.

A poor rating was also given to the policy package announced on February 27 this year, which included the collective apartment sales for Pangyo new city in November.

This is according to research initiated by Dong-A Ilbo and conducted by the Korea Research Center, which specializes in survey research, from a survey of 150 professors and researchers of economics, city planning, and real estate from universities around the nation.

The research was conducted on 25 detailed action plans included in five policy packages announced on May 23, September 5, and October 29, 2003, and February 17 and May 4 of this year.

Experts gave scores from minus five to five in accordance with their effects on the stabilization of the real estate market.

The policy packages announced in September 2003 and February this year received negative scores, -1.6 and -0.8, respectively, showing that these packages had more of a negative impact.

On increasing the rate of mandatory construction of small-sized housing, the core policy of the September measure, 69.4 percent of the respondents valued the policy negatively.

Packages released on May 23 and October 29, 2003, and May 4, 2005, received 0.6-1.1 points, meaning they contributed to the real estate market’s stabilization.

Cutting acquisition and registration taxes and the 20-year mortgage loan policy received 1.6 points each, the highest scores among the 25 action plans.

Tighter restrictions on overly speculative areas (1.5 points), accelerating lease-purposed public houses (1.4 points), restricting trades of home ownership for the residential and commercial apartment complex with more than 20 homes (1.2 points), wider implementation of capital gains taxation based on actual market prices (1.1 points), and higher possession taxes (1.0 points) all scored over 1.0 points.

Widening the mandatory construction rate for small-sized housing (-1.6 points), the collective sales of apartments in Pangyo new city this coming November (-1.2 points), and constructing the administrative city and moving public companies outside of Seoul all scored below minus one point, meaning those policies will probably be discarded.

Professor Kim Jeong-ho of the Korea Development Institute (KDI), a government think tank, said that most of the policy packages failed and that the survey clearly shows the reasons behind it.

Jae-Seong Hwang jsonhng@donga.com sunny60@donga.com