Cheong Wa Dae says will never quit efforts to stabilize housing market

SEOUL-- The Moon Jae-in administration will never cease efforts to help stabilize the housing market, a senior official from the presidential office Cheong Wa Dae said Thursday, noting the new government has five years to go.

The remarks came one day after the government announced a set of measures to curb a recent spike in home prices that it apparently believes may have been partly caused by speculation.

Kim Su-hyun, the top presidential secretary for social affairs, said he was not sure how well the measures will work.

"However, what is certain is that this government will never back down from dealing with real estate prices under any circumstances," he told reporters.

"It has been less than three months (since the new government launched). It has at least five years to safely transform the housing market into a new structure through firm and stable means," Kim added.

Kim took responsibility for what he called the failure of the former Roh Moo-hyun administration in stabilizing home prices, noting most of the former administration's measures, partly devised by himself, had focused on the supply and demand side.

"What those measures then had lacked was measures to deal with excess liquidity that eventually triggered the 2008 global financial crisis," he said.

Kim served as a presidential secretary for social affairs under the late former President Roh throughout most of Roh's five-year term between 2003-2008.

He blamed the two former conservative administrations under Lee Myung-bak and Park Geun-hye that followed the liberal Roh government for the latest surge in home prices, insisting the two had removed nearly all restrictions aimed at keeping home prices down and preventing speculation.

The latest housing market measures announced Wednesday sought to reinstate the main ideas of those taken under the Roh administration, Kim acknowledged.

But now they also address the issue of excess liquidity.

Under the latest measures, the loan-to-value (LTV) and debt-to-income (DTI) ratios will be reduced to as low as 30 percent for multiple home owners, making it harder for them to borrow money to engage in speculation.

Currently, the LTV ratio is at 70 percent for most homes with the DTI ratio set at 40 percent.

As of end-March, the country's overall household debt came to a record high of 1,360 trillion won (US$1,205 trillion), up 11.1 percent from 1,224 trillion won a year earlier.

The main opposition Liberty Korea Party and the conservative Bareun Party, both affiliated with the former conservative leaders, have denounced the latest housing market regulations, insisting prices can only be reduced with an increase in supply.

"Basically, housing prices can be resolved only by expanding supplies. Seeking to reduce home prices through regulation cannot but repeat the course of policy failure that will only lead to a spike in real estate prices," said Rep. Kim Gwang-lim, the acting chief of the main opposition party's policy committee.

Kim said the new government may supply new homes but at the right time and for the right people.

"With regard to the issue of supply, saying we must build new houses in an area that is still on fire is not reasonable. Now is time to put the fire out. The government will increase the supply for the right people once the fire is out," he said.

The Cheong Wa Dae official also noted the former Park Geun-hye administration had supplied more than 700,000 new homes in one year, the largest number of new houses to be built in a single year in the country's history, but still failed to reduce home prices.

Source: Yonhap News Agency

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