Chairman Park Chang-min of the Korea Housing Association.

The Korean housing market has reached a milestone. Transactions are back to levels not seen since before the global financial crisis. There is no concern of a housing glut, said Chairman Park Chang-min of the Korea Housing Association (KHA).

Chairman Park said, “The housing market is apparently getting warmer as housing transactions across the nation showed a record high figure since 2006.” 

Stats on housing released by the Ministry of Land, Infrastructure and Transport (MOLIT) showed that transactions across the nation amounted to 111,869 in March, a 24.4 percent surge over the same month in 2014 and a 41.9 percent jump over the previous month. 

The housing demand, which struggled to recover post-global financial crisis, had rebounded, particularly with rising demand from people in their 30s and 40s who want to own homes due to the burden of soaring jeonse prices. 

In this regard, Park said some people are worried the domestic housing market might return to unsustainable levels in 2006. But the situation today is much different than it was at that time, said the KHA chairman. He noted that housing transactions are now on the rise, but housing prices are not so high, suggesting the market is approaching a stage of normalization. In March 2006, apartment prices soared 6.96 percent month-on-month, but in March 2015 apartment prices rose 2.65 percent over the previous month. 

“What’s more important is that the rising momentum of the housing market needs to be maintained in order to reinvigorate the national economy and boost domestic demand,” Park said. To this end, he added that the government needs to retain a stance of relaxing regulations.

The incumbent government’s strengthening of market forces in the housing market since its inauguration has begun to put it on the right track, as housing transactions are on the rise, the KHA chairman said. It has awakened to the significance of the timely implementation of housing policies. He maintained that punitive taxes imposed on multi-house owners should be scrapped to put the housing market on the right tack in a full-fledge fashion. The move is designed to salvage the housing market, coupled with severe jeonse shortages and the slowdown of the domestic economy, he said. Since there is no worry about a housing price explosion, as has happened in the past, he said comprehensive real estate taxes discriminating against multiple-house owners should be eliminated so as to ensure the smooth supply of rental houses, easing the pain of low-income households. The temporary easing of the debit to income ratio (DTI) and the loan to value ratio (LTV), to be expired on July 31, will have to be renewed for another one year, he said. 

Thanks to the government’s measures to ease regulations against the housing market, housing transactions have returned to levels prior to the current crisis, with such temporary trends as a sharp reduction in unsold apartments. But such uncertainties linger as a long-term low growth trend, jeonse price hikes, and soaring household loans, Park said. The housing market is undergoing a changing demographic structure, like the retiring of baby-boomers and a paradigm shift from jeose to monthly rental. 

Park said the KHA will focus on three tasks during the year. 

First, he said his association is seeking to have the government take measures to boost housing demand, including the scrapping of the remaining regulations on the housing market, like comprehensive real estate taxes discriminating against multi-unit owners. The second is to expand the private sector’s supply of housing units by overhauling public management of rejuvenation projects. The third is about the securing of new growth engines for the restructuring of the housing market, like support to boost the private sector’s rental businesses.