Addressing the Jeonse Crisis and Housing Supply Challenges
Experts in the real estate sector are emphasizing that the government should focus on stabilizing jeonse and monthly rents as a top priority in its real estate policy. They also suggest normalizing the private supply ecosystem to alleviate market pressures and create a more balanced housing environment.
The current jeonse crisis has been widely attributed to the policies of the previous administration. During the Moon Jae-in era, strict comprehensive real estate taxes of up to 6% were imposed on multiple homeowners. This led to an increase in the “smart one-house” phenomenon, where homeowners sold their properties and invested in high-end apartments in areas like Gangnam. The regulatory approach of labeling these individuals as “speculators” had unintended consequences, reducing the availability of rental properties.
The measures introduced on October 15 further complicated the situation by imposing loan and transaction restrictions. These policies pushed even more homebuying demand into the jeonse market, worsening the instability. Experts argue that this approach was counterproductive and did not address the root causes of the problem.
Reevaluating Policies for a Balanced Approach
Yang Ji-young, a special committee member at Shinhan Premier Pathfinder, highlighted the issue of demonizing those who purchased an extra house to supply jeonse and monthly rents. She suggested that if easing regulations in Seoul proves challenging, the government should consider significantly relaxing punitive taxes on multiple homeowners in non-regulated areas or regions outside the capital.
The ultimate solution to the real estate challenges lies in increasing the quality of housing supply. To achieve this, there is a growing call to relax regulations on reconstruction and redevelopment projects, aiming to normalize the private supply ecosystem. This would encourage more participation from private developers and help stabilize the market.
Lee Chang-mu, a professor at Hanyang University, criticized the October 15 measures’ ban on transferring membership rights in regulated areas. He argued that such policies infringe on property rights and hinder development projects. He emphasized the need to improve systems that guarantee a certain level of profit to stimulate private housing supply.
Seo Jin-hyeong, a professor at Kwangwoon University’s Department of Real Estate and Legal Affairs, pointed out that public entities like LH should focus on providing rental housing for vulnerable groups. At the same time, the private sector must be incentivized through practical measures such as postponing the excess profit recovery system for reconstruction and shortening resale ban periods. These steps could create conditions for supplying quality housing.
Shifting Policy Direction for Market Trust
In summary, experts agree that the government must fundamentally shift its policy direction from one-sided regulation to restoring market trust. This involves encouraging participation from multiple homeowners and private construction companies. By focusing on stability and fairness, the government can create a more sustainable and equitable real estate market.