|Minister of Land, Infrastructure and Transport Kim Hyun-mee speaks during a briefing on the government's housing stabilization measures at the Government Complex Seoul, Thursday. Yonhap|
By Lee Min-hyung
Minister of Land, Infrastructure and Transport Kim Hyun-mee issued a public apology Thursday for the increasing shortage of rental housing here amid prolonged instability in the leasing market.
"I express my apologies to the public facing difficulties in finding new rental housing," Kim said during a media briefing. Her comments made headlines as she rarely makes apologies even after the ministry's housing stabilization policies have failed to achieve their goals, instead aggravating confusion by sparking a nationwide housing bubble.
The message, however, came amid growing public criticism over escalating housing market uncertainties represented by the recent surge in rent prices. This has also ended up driving up housing sales prices, leaving potential tenants in a state of despair.
Kim attributed the rental price hike to an interest rate decline and an increase in demand for rental housing.
"The key reasons behind the price hike of rental housing include the interest rate decline ― a measure to deal with the COVID-19-induced economic downfall ― and the increase in the number of single-person and two-person households," Kim said.
The government has so far implemented 24 regulations to stabilize steeply rising apartment prices in Seoul and its surrounding cities, but most of them ended up in a de facto failure.
She acknowledged that tough housing regulations on multiple homeowners have brought about the unexpected shock in the housing rental market and resulted in a supply shortage of rental homes.
The land ministry, along with the Ministry of Economy and Finance and the Seoul Metropolitan Government, held the joint media briefing to unveil additional market stabilization measures.
Under the plan, the government will supply 114,000 public rental homes by the end of 2022 for citizens in the mid- to low-income bracket. About a third of them will be supplied in Seoul, according to the government.
Finance Minister Hong Nam-ki expressed hopes for the latest measure to help relieve the rental housing shortage.
Despite the measure, the authorities have not shared their plans over how to stabilize the already-soaring rental apartment prices in Seoul and Gyeonggi Province.
According to the Korea Appraisal Board, Thursday, the average apartment sales price nationwide increased by 0.25 percent as of Nov. 16 from a week earlier. This is the steepest growth in eight and a half years since May 2012 when the organization started releasing the statistical data.
The government also shared its plan to supply 63,000 "quality rental houses" for thee- to four-person households over the next five years. The size of the mid-sized homes will span 60 square meters to 85 square meters, according to the finance ministry.
The decision reflects growing complaints that the government's public rental homes are too small and low quality.
While announcing the stabilization measure, Hong also apologized to those planning to buy new homes amid the recent housing price hike.
"I feel sorry for those who will face difficulties in purchasing homes after their lease contracts expire," Hong said.
Experts, however, remained pessimistic over whether the new announcement will be able to generate tangible outcomes in terms of stabilizing the prices.
"The latest policy will not help stabilize the market unless the government eases regulations on the overall housing market," said Kim Dae-jong, a professor of business administration at Sejong University.
"Housing policies should be completely overhauled for market stabilization. Most of the regulations are centered on protecting tenants, but one-sided policies will keep distorting the market."
Kwon Dae-joong, a professor of real estate at Myongji University, also said most of the newly supplied housing is not apartments, but remodeled commercial accommodation facilities for single-person households.
"Even people living alone want to live in apartments," he said. "On top of that, the government did not share concrete plans over how to raise capital for the latest policy."