The Dec. 16 Real Estate Measures Declare the Full-Scale Rollout of Socialist Policy

The December 16 real estate measures are a declaration of the full-fledged implementation of socialist policy

Under the Moon Jae-in administration, the 18th real estate measure has been announced. On December 16, the government unveiled the “December 16 Comprehensive Real Estate Measures,” which include a “complete ban on mortgage loans for homes priced above 1.5 billion won,” a “reduction in mortgage loan limits for homes priced above 900 million won,” a “major expansion of areas subject to the price ceiling on apartment sales in private housing developments,” and a “heavier comprehensive real estate tax on owners of two or more homes, with the top rate raised to 4 percent.”

Among real estate experts, there is heated debate over these measures. Some argue that “expectations of excessive housing price increases will disappear, stabilizing the housing market,” while others contend, “No. Perhaps in the short term, but after some time passes, prices will soar due to supply shortages and other factors.” Discussion over whether the real estate market will stabilize or become even more volatile is certainly important. But there is another issue in these newly announced comprehensive real estate measures that we should take even more seriously: the December 16 Comprehensive Real Estate Measures are, at least with respect to housing, effectively a declaration that socialist policy is now being implemented in earnest.

In a free market economy, the allocation of housing, like that of all other goods and commodities, should be determined by price. Which home to buy or sell, at what price, and under what terms should be matters freely decided by the buyer and seller. And individuals should also be free, under their own responsibility and judgment, to decide where and how to secure the funds needed in that process.

But the December 16 real estate measures deny all of this. For example, the measure that completely bans mortgage loans for purchases of homes priced at 1.5 billion won or more means that only those who already possess at least 1.5 billion won in cash can buy such homes; those without that much cash are effectively being told to give up the idea of buying one. This measure also excludes those wishing to purchase homes priced above 1.5 billion won from using financial institutions. That means housing is no longer allocated according to the free decisions consumers make, under their own responsibility and judgment, in light of housing prices. Instead, it becomes little different from a kind of rationing system in which housing is distributed only to those who meet standards set by those in power and the government. If it is not socialism for those in power, rather than consumers, to distribute housing according to standards they themselves establish, then what is it?

The plan to impose heavier comprehensive real estate taxes in order to pressure owners of multiple homes to dispose of them quickly is likewise a socialist measure. In a free market economy, homeowners should be free to decide, under their own responsibility and judgment, when to sell and on what terms. But this measure imposes an excessive burden through punitive taxation, effectively forcing homeowners to sell in haste against their will, so that others can buy at prices below the market rate. This, too, is nothing more than an artificial housing distribution measure imposed by the government rather than determined by price. In other words, it is no different from a socialist policy in which the government decides who may own housing and who may not.

Protecting and safeguarding individuals’ lives, liberty, and property is the state’s foremost duty. The December 16 Comprehensive Real Estate Measures openly declare the exact opposite. Can a state that, contrary to its foremost duty, uses power to oppress individuals’ liberty and property, coercively distributing them according to its own standards, be called a “just” state? Let me emphasize: the state’s first duty is to protect and safeguard individuals’ lives, liberty, and property.

Hyeokcheol Kwon

Vice President, Center for Free Enterprise (CFE)

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Original title: 12.16 부동산 대책은 사회주의적 정책의 본격화 선언이다

Author: Hyeok-cheol Kwon

Date: 2019-12-18

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=11&idx=22170