SEOUL: As Seoul property prices soar, there’s a new apartment on sale this month: for the best part of an estimated US$1 mil, you could buy a piece of future Gangnam glitz from reluctant seller Noh Young-min – the chief of staff of President Moon Jae-in.
Noh is one of a group of senior government officials facing a public backlash over multiple home ownership in one of the world’s hottest property markets, where median apartment prices have rocketed more than 50% in three years, KB Bank data shows.
His move to sell his Gangnam crib, the size of about three parking spaces but worth about 1.1 billion won by current market prices, came just ahead of Friday’s government announcement that South Korea will further tighten property rules and impose heavier taxes on multiple homeowners in its latest effort to calm the market.
But more than 20 rounds of cooling measures in the past three years have failed to stop runaway prices. Effective or not, the new steps announced by Finance Minister Hong Nam-ki – including raising real estate taxes on multiple home-owners to up to 6% per year – will keep public focus an issue that is wiping out a surge in President Moon’s approval ratings from the handling of the coronavirus pandemic.
His approval rating dropped to 47%, a Gallup Korea survey showed on Friday, down from last week’s 50% – the lowest in four months. In early May, Moon’s approval rating hovered around a lofty 70% after the ruling Democratic Party won an absolute majority in a parliamentary election.
“Today’s measures will not have much effect on stabilising the property market as the real estate tax hike will not be applied immediately,” said Kwon Dae-jung, real estate professor at Myongji University.
“The sale of high-ranking officials’ houses is them doing the right thing morally, but that will not directly contribute to stabilising the property market. It can indirectly affect the market by hinting that the government will strengthen its regulations but that’s about it – just giving signals.”
Anger over the failure to calm runaway home prices has extended to government officials with multiple residences, under pressure to sell second homes to show they are committed to policy focused on imposing heavier tax penalties and mortgage curbs for multiple home owners.
For some voters, frustration has already turned to resignation.
Park Byung-jin, a 40-year-old office worker in Incheon, west of Seoul, says he has lost hope in Moon’s policies.
“I’m not even angry. They have been keeping all the good homes, and telling us not to buy anything is extremely unconvincing,” he said. – July 10, 2020, Reuters
