Property right is vital in the functioning of market economy; without the guarantee of the right to property, the idea of market economy cannot be established. However, the government is now performing a conjoint attack with the media on property rights ― with all kinds of taxes and regulations. This phenomenon is at best dismantling the very base of the market economy, and plainly wrong.
The current real estate policies are misled with the wrong understanding of what it means to buy and sell houses. To stabilize the real estate price is basically to stabilize the market itself. Nevertheless, the rhetoric of house "pricing" deluded the government.
It eventually had the government and its policies lose their grip on the basic principle of stabilizing the housing "market" itself. Price which has been formed under the natural balance between supply and demand were then artificially manipulated. It only triggered greater chaos in not only the market but also the price which was the origin of the delusion.
House price can never be the target. Stability in the market can only be achieved through natural balance between the supply and demand. The results that participants in the market can eventually benefit from and be satisfied with, are possible so. Yet, the government formed a strict boundary in which the supply and demand can be met.
Such unnatural force pushed and pulled the unwilling buyers and sellers in the market, stirring up even greater instability. Instability then transcends into vulnerability and changeability in the market and its participants. Through such course, real estate policies brought about diverse balloon effects and unnecessary competition in the pricing within the market.
What is required now is to reduce the margin of doubt in the price and stabilize housing prices. Quality housing should be supplied into the market across the country, not only in Seoul. Rather than suppressing inevitable demand forcefully, timely supply to meet the demand in existence is a sound policy-making and governance.
The chaos of late in the house market is founded upon an irony. The government and its policies are based on misinterpretation of speculators and lack of supply in housing. If the former were in effect and to be handled, demands for speculations should have been diversified in other regions outside of the Seoul.
If the latter, extra supply of housing in regions of greater price should have been in action. Nevertheless, what the government chose was to press down the existing demand and pump in unwanted supply. This hastened the influx of speculators and getting an affordable housing in Seoul has now become near fantasy.
Seoul is a megacity with half of the nation's population in and out of it. Many jobs in both public and private sector are circled around it. Invisible yet immense value of the region cannot be simply reduced to "single adequate price." Blaming speculators for the rise of pricing in the market is a wrong decision and scapegoating.
If the government were serious to put down the price, reasonable and sound real estate policies based on the full understanding of such reality should have been in place. However, intellectual laziness and a sense of moral superiority had them demonize people wanting to make home in Seoul, which had all the means and reasons to attract them.
If stabilized and rational real estate price is to be achieved, excessive regulations in the market are to be removed and policies in coordination with market principles should be introduced. Supply should be met in regions of higher demand with good quality. Only through such policy direction and its effect, real estate market can function in a way to better our lives.
This is the direct opposite of what the government is currently pursuing, but people in demands and their needs can only be satisfied and met with the total shift of attitude and action. Government should step out of long delusion of controlling and picking out speculators out of the market. Experimentalism and obsession with regulatory schemes have already proven themselves wrong a long time ago.
Wrong policies coming from wrong diagnosis can never produce a meaningful result. Demonizing residence in Seoul in turn resulted in the rise of price in Seoul housing market. Conflicts and envies were worsened in such atmosphere.
Only the supply of affordable quality housing can be a solution to this chaos. Having to worry about the residence all the time can never be a fruitful and prosperous life. Real estate should be a mean to catalyze products of good quality into the market continuously, which will eventually make people's lives more stable and happier.
Choi Sung-no is president of the Center for Free Enterprise.
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