No magic wand for apartments

Democratic Party (DP) chief Song Young-gil devoted most of his time on the National Assembly podium as the new representative of the ruling party on the party's suggestions on real estate measures. He vowed "radical supply..

Democratic Party (DP) chief Song Young-gil devoted most of his time on the National Assembly podium as the new representative of the ruling party on the party’s suggestions on real estate measures. He vowed “radical supply actions close to supply bombardment” by admitting the government’s heavy taxing has failed to tame the runaway housing prices. The DP has finally come to acknowledge the cause for the spike in home prices to focus more on beefing up supply for those without housing.

The DP has formed a taskforce with the government and the Seoul Metropolitan Council to develop the third New Town Project. A special real estate committee under the DP is also pushing ahead with the project to find new locations for residential complexes in inner Seoul. The changes are positive to correct the disruption in the housing market due to excessive regulations.

Still, the measures the party are pursuing fall short of solving fundamental problems. The so-called “Housing Project for Everyone” Song has suggested cannot be a universal plan. The idea itself is radical. It proposes allowing subscribers to own an apartment upon paying 6 to 16 percent of the sale price and rent fees for 10 years. Since the sale price is fixed, the owner can also expect to profit during 10 years of residence. The project has already been trialled in a 1,096-household apartment complex in Midan, Yeongjong, Incheon.

The DP plans to provide similar housing for 10,785 households in six satellite cities in the capital region — Incheon, Ansan, Hwaseong, Euiwang, Paju and Siheuing. Whether the move can solve housing insecurity in Seoul is uncertain. Apartment prices in Seoul average more than 1 billion won ($884,173) per unit.

The “Home for Everyone” program would be financed 90 percent from loans from urban housing funds and guarantees for rent deposit funds. The funds raised from the project cannot meet the enormous financial need for new housing in Seoul. A builder who seeks immediate returns also won’t likely take up the idea.

The project will just turn out to be wishful thinking and end up discouraging people. The DP’s feigned measure will only fuel public frustration. None of its member lawmakers advised to leave the party for suspicion on real estate speculation have acted. If the party is sincere about normalizing the housing market, it must remove the regulatory measures and heavy taxes first.

There is no panacea for housing woes.