In publishing the book
The Moon Jae-in administration's real estate setbacks demand responsibility and reflection.
Why the Moon Jae-in Administration Failed to Control Housing Prices | For Healthy Debate and Discussion | Real Estate and Politics: A Reality We Want to Deny

Part 1: The Moon Jae-in administration's real estate policy setbacks

Chapter 1 What Happened to Real Estate?
: Soaring housing prices and public anger

House prices have doubled.
* Look closer: Real estate statistics that even the government can't trust?
28 large and small real estate measures
The division and wounds left by skyrocketing housing prices

Chapter 2: Why Did the Moon Jae-in Administration Fail to Control Housing Prices?
: Incompetent or inadequate?

It was a difficult situation
Is the Moon Jae-in administration incompetent or inadequate?
Theory of Intention | Theory of Incompetence | Theory of Inadequacy | It was a difficult situation, but if only we had done better...
* Look closer: The undersupply theory and the demonization of multiple homeowners.
Four Responsibilities of the Moon Jae-in Administration
Real estate lending should have been curbed more strongly | Supply anxiety was not quickly alleviated | Trust in real estate regulation was lost | Policy leadership faltered
To avoid this from happening again
* Look closer: My mistakes and responsibilities

Part 2.
Let's take a closer look at the real estate issue.

Chapter 3: The recurring real estate problem
: Why do house prices keep rising and falling?

I had the same experience again
Over the past 30 years, the world has experienced three waves.
Fear: Between FOMO and FOOTBALL
The structure of rising and falling house prices
* Look closer: Are house prices due to supply or interest rates?

Chapter 4: Leave real estate to the market?
: But the government should take responsibility.

Market, market, market!
Anti-market theories become weapons of incitement
Why does the government lie?
* Look closer: Is real estate policy driven by ideology? NO.

Chapter 5: Only regulation and no supply?
: Is it undersupply or overdemand?

Are house prices rising due to insufficient supply?
How to properly increase urban supply
Is it possible to reserve land in advance?
"Home is not bread": Things to consider in the context of supply shortage theory

Chapter 6: Real Estate Taxes That Everyone Is Dissatisfied With
: Was it a problem because it was high or because it was low?

Can we control house prices with taxes or not?
The origin of the politics of property tax is President Park Chung-hee.
* Read More: Why We Still Need a Comprehensive Real Estate Tax
Property tax populism
* Read more: Landholding Tax and Basic Income
Transfer tax that can be avoided
Real estate taxes: The biggest problem is loss of trust.

Chapter 7: Why Finance is Key
: When money overflows, house prices rise.

House prices and money prices move in opposite directions.
The aftershock of housing prices brought on by COVID-19
Korea followed the same path.
Have you neglected real estate to defend the economy?
* Look closer: Even then, interest rates were the main character.
* Look closer: The arguments for loosening lending regulations during the election season, amid soaring housing prices.

Chapter 8: The Two Faces of Multi-Homeowners
: The culprit or the scapegoat?

Did private rental businesses raise housing prices?
Opaque rental market reform and my responsibility
Not everyone can live in my house
How to Coexist with Multi-Homeowners
* Read more: Villa King and the Jeonse Fraud

Chapter 9: The Illusion of "Half-Price Apartments"
: Real estate populism like a drug

More, cheaper
There is no such thing as a free lunch.
The ultimate populist: half-price apartments
There is no dream housing policy.

Chapter 10: Is Public Rental Housing No Longer Needed?
Young people who want to own their own home rather than rent

Is it public rental housing or public housing?
The more unstable the housing prices, the more public rental housing
In reality, only 5.5% of public rental housing is

Chapter 11: Financialization and Investment Commodification of Housing
: The whole world is facing the same problem.

A Key to Understanding the Problem: Financialization of Housing
The generation that has no choice but to rent vs. the generation of landlords
Are there alternatives to the financialization of housing?
* Look closer: Is it generation or class?
Jeonse loans are the fuse that fuels rising housing prices.

Part 3.
What should we do?

Chapter 12: The Land of Real Estate Populism
: Beyond egalitarianism, sensationalism, and romanticism

The Fate of Korea's Real Estate Problem: Familism and Egalitarianism
Populism that has ruined real estate policy
Quantity populism | Half-price apartment populism | Tax populism
There is no magic key that says, "Just do this."
Market fundamentalism | Property tax fundamentalism | Cost disclosure fundamentalism | Rampant romanticism, idealism, and demagoguery
* Read more: Is it possible to predict home prices?

Chapter 13: Things to Consider in the Moon Jae-in Administration's Frustration
: To avoid this from happening again

Things to learn and reflect on
Ten Things to Consider from the Moon Jae-in Administration's Frustration
Our country has its own unique real estate problems and culture | The core of the global real estate problem is the financialization of housing | There are market roles and government roles | There are norms to be observed in the real estate market | Demand is fast and supply is slow | There are policies that should and should not be changed depending on the economy | Let's break free from the addiction to real estate populism | Experts must also take responsibility | The government should no longer promise to control housing prices | This must be resolved, and it will be resolved.

References

A book written by the person in charge of real estate policy in the Moon Jae-in administration

What happened to the real estate market during the Moon Jae-in administration? Above all, the Moon Jae-in administration failed to control housing prices.
There were many places where the price of houses was not just unaffected, but more than doubled.
The rent also rose accordingly.
Because of this, the whole country was heated by the real estate issue throughout the Moon Jae-in administration, and many people cited the real estate issue as one of the reasons for the change of government to the Yoon Seok-yeol administration.

The author of this book, Kim Soo-hyun, former chief of staff at the Blue House, is mentioned as the person responsible for or the designer of the Moon Jae-in administration's real estate policy.
Civic groups, the media, experts, the People Power Party, and the Democratic Party have also pointed to the author as one of the people most responsible for the surge in housing prices.
The author begins this book by acknowledging that he bears great responsibility.
In doing so, we will review one by one why the Moon Jae-in administration failed to control housing prices, what it should have done to control them, and why housing prices rose.
“Someone like me, who is being criticized by everyone, needs to speak up first” (page 12), he says, taking a serious look at the real estate problem in Korea.
This book reflects on the real estate issues in Korean society and identifies alternatives, while looking back on the reasons for the Moon Jae-in administration's failed real estate policies.
“You can use any expression you like – ‘reflection,’ ‘confession,’ or ‘introspection – but I believe it would be helpful to our society to reveal the thoughts of those who were deeply involved and concerned at the time.” (Page 11) “If the Moon Jae-in administration’s real estate policy has failed, we should record and discuss why it failed and how to prevent it from happening again.
We must also carefully examine the criticisms of the many people who argued that this was the right way to do it.
“Without introspection on the Moon Jae-in administration, we cannot properly address situations that may recur in the future.” (pp. 71-72)

The relationship between real estate and politics

What does the title of this book, "Real Estate and Politics," mean? The author argues that real estate policy should not be influenced by politics or ideology.
Above all, he emphasizes that we must not be swayed by real estate populism.
This is the principle that we must take and implement policies.
However, the author himself and the Moon Jae-in administration also confess that they are not free from the politicization and populism of the real estate issue.

If house prices continue to rise, the whole country will be in turmoil.
Public sentiment is unsettled, and the government and the ruling party become anxious.
The opposition party, media, civic groups, and experts immediately began criticizing the government.
Each person proposes their own solution, a prescription that says, 'This is all you need to do.'
The conservative side argues for “leave it to the market,” while the progressive side emphasizes “recover unearned income.”
On the Internet, various predictions of housing prices and sensational claims are rampant.
If this happens, the political world will come out on the populist front, promoting more provocative policies.
Rather than focusing on the practicality of the policy, they become preoccupied with solutions that the public, or more narrowly, their supporters, cheer for.
In times like these, even the government loses its way.
Even as we watch the entire country being shaken by the turbulent real estate policy, we fail to maintain a reasonable line.
The government will soon be pushed into policies demanded by populism.
The more this happens, the less trust there is in policies, and the more anxious the people become.
The effectiveness of the policy naturally decreases.
The author says that the Moon Jae-in administration also followed a similar process.
Although 28 large and small real estate measures were announced, the effect was minimal and only division and wounds were left behind.
The author's diagnosis is that real estate policy is constantly being driven by political pressure, and this is what the title of this book implies.

Why didn't the Moon Jae-in administration control housing prices?

So why did the Moon Jae-in administration's real estate policy fail? Let's first examine what happened to the real estate market during the Moon Jae-in administration.
The Moon Jae-in administration took office at a time when housing prices were rising due to the real estate market cycle.
“Based on past experience, the upward trend was bound to continue for at least five years.
“It is not that housing prices rose after the Moon Jae-in administration took office, but rather that the Moon Jae-in administration came to power during a period of rising housing prices.” (Page 60) It was a time when housing prices were rising not only in Korea but also around the world, including in the US, UK, and Japan.
In fact, from the inauguration of the government in May 2017 to its peak in October 2021, apartment prices in Seoul nearly doubled.
It was the largest increase since the Roh Moo-hyun administration.
The Moon Jae-in administration has introduced 28 real estate measures to stabilize housing prices, but the policies have not shown results quickly enough to allay public anxiety.
In this context, the COVID-19 pandemic broke out in 2020.
Interest rates were slashed to record lows, loan payments were deferred, and several rounds of disaster relief payments were issued.
However, as the released money flowed into real estate, stocks, and coins, housing prices rose further.
As housing prices skyrocketed, the entire country became obsessed with housing prices.
The number of people earning money from home has increased, and those who trust the government and wait without buying a house are angry.
There was a flood of protests asking why these crazy housing prices couldn't be brought under control.
The opposition party, the media, and experts also criticized the government, proposing their own solutions such as "leave it to the market," "supply shortage," and "recover unearned income."
During the election period, various real estate populisms were rampant.
During this period, many people bought houses that were 'soul-pulling' (spirit-pulling).
The Moon Jae-in administration imposed strict lending regulations, but household debt reached 105.8% of GDP at the end of 2021, when soaring housing prices were at their peak.
But soon the bubble began to burst.
As the United States sharply raised interest rates in 2022 due to soaring inflation, housing prices in Korea fell at a frightening rate.
Those who had bought houses on a tight budget suffered the double burden of high interest rates and falling house prices.
As house prices fell and jeonse prices plummeted, there were even cases where jeonse deposits for villas could not be returned.
The so-called rental fraud incident broke out.
Problems also began to arise in the construction industry, which had seen a significant increase in bubbles during the period of skyrocketing housing prices, as housing prices began to fall.
As housing prices skyrocketed, society became divided, and the damage was passed on to the people.
Given these circumstances, why hasn't the Moon Jae-in administration been able to control housing prices?

Four Responsibilities of the Moon Jae-in Administration

During the Moon Jae-in administration, a surge in liquidity occurred that the world had never experienced before.
In addition to the low interest rates and quantitative easing that have persisted since the 2008 financial crisis, COVID-19 has led to a monetary loosening unprecedented in the history of capitalism.
The Moon Jae-in administration faced a market situation where the real estate market was in a period of upward cyclicality and unprecedented liquidity.
It was not a 'lack of supply' or 'tax issues' but the excess liquidity that drove up housing prices in Korea.
The author expresses regret that, despite Korea's situation, the Moon Jae-in administration should have taken a more proactive approach and prepared countermeasures.
The author points out that the Moon Jae-in administration has four responsibilities.

First, it failed to curb real estate lending more strongly.
In a situation where liquidity is abundant, money is flowing into the asset market and house prices are rising.
At that time, it was possible to buy a house by borrowing only 20-30% of the house price from a financial institution.
It was also common for families to use their own homes as collateral to borrow money to help their children purchase homes.
The economy of ordinary people has worsened, and polarization has deepened.
However, during this period, the Moon Jae-in administration failed to implement stronger lending regulations and household debt management. Despite strict lending regulations, such as LTV and DTI, these measures failed to curb rental housing loans, credit loans, and corporate loans.
In particular, jeonse loans have also become a fuse for rising housing prices.
Also, the introduction of the DSR, which measures repayment ability relative to income, should have been expedited, but it was delayed.
The author points out that the fundamental cause of rising housing prices was 'liquidity', and the key was the tightening of the money supply, but the failure of economic policymakers to take action despite knowing this was a factor in the failure of real estate policies.

Second, the supply anxiety was not quickly alleviated.
Market advocates have long criticized the Moon Jae-in administration for failing to supply real estate in a timely manner, leading to rising housing prices.
Above all, he said that the problem was that 'good houses' were not supplied in Seoul and the metropolitan area due to redevelopment and reconstruction regulations.
Although the supply shortage theory had many elements of a political frame that attempted to politicize the government's policy failures, the Moon Jae-in administration failed to quickly quell this argument.
In that respect, the author expresses regret that if the third new town plan had been announced a little sooner, the controversy over the supply shortage would have been reduced.

Third, trust in real estate regulation has been lost.
Real estate policies should be implemented differently depending on the economy.
During periods of rapid growth, policies should be implemented to suppress demand and expand supply, while during periods of rapid decline, policies should be implemented to stimulate demand and adjust supply.
But the Moon Jae-in administration has veered into unprincipled and extreme territory.
Representative examples include the unrealistic increase in the comprehensive real estate tax in July 2020 and the establishment of an unrealistic plan to realize the unrealistic tax base, the 2019 reconstruction sale price ceiling system, and the unrealistic method of imposing excess profit recovery for reconstruction.
Most of these have either withdrawn or failed without ever being put into practice.
It only provided a pretext for ideological controversy and undermined trust in the policy.
The same was true for the rental business system.
In late 2017, the government announced a recommendation to expand and strengthen registered rental housing by private rental operators, but then scrapped and reversed it less than a year later.

Fourth, policy leadership was shaken.
When markets are unstable and policy effectiveness is questionable, policy leadership and control tower functions are bound to be shaken.
In times like these, differences of opinion arise within the government and between the government and the ruling party.
Of course, opinions don't come together easily.
The political world is more concerned with appeasing public anger and regaining support than with policy rationality.
“Let’s raise taxes,” “Let’s supply 2 million more rental housing units,” “Let’s build houses in Yongsan Park, Gimpo Airport, and the Green Belt,” “Let’s lend more money so that young people can buy houses.”
Even the government and the ruling party, which should have been at the center, ended up relying on populism.
At a time when housing prices were skyrocketing, the Moon Jae-in administration failed to establish policy leadership and ended up getting caught up in the situation.

The author also mentions his own responsibility.
The fact that the Moon Jae-in administration took on the same role as the Roh Moo-hyun administration may have provided a pretext for a 'failure frame'.
“Government policy is not a structure that can be dominated by a specific individual, and I do not believe that I have ever acted in that way, but it is regrettable that the Moon Jae-in administration’s real estate policy has provided a cause for distrust by being ‘personified.’” (p. 74) He also states that he is largely responsible for the fact that financial regulations, the announcement of the third new city, and the rental registration system were not implemented properly at an appropriate time.

The main character then and now is Geumri
But Korea is a country of real estate populism.

“Generally, interest rates and liquidity have the most direct and immediate impact.
As money becomes more abundant and the value of money falls, money flows into real assets to avoid inflation and to obtain greater investment returns.
The relationship between actual home prices, interest rates, and liquidity can be seen as moving almost in opposite directions.
This can be seen in most countries.
“As interest rates fell and liquidity increased, house prices rose, and when interest rates began to rise at a certain point, house prices tended to fall.” (pp. 155-156)

Why are housing prices rising? Is it due to a lack of supply? Or is it due to the lack of property tax increases? The author argues that the reason housing prices soared during the Moon Jae-in administration was due to global liquidity glut.
As interest rates fall and liquidity increases, house prices rise, and at a certain point, when interest rates begin to rise, house prices begin to fall.
During the Moon Jae-in administration, housing prices were rising due to excess liquidity, and during the Yoon Seok-yeol administration, housing prices were falling due to interest rate cuts.
In 2022, when the United States raised interest rates significantly and the Bank of Korea also raised interest rates, housing prices began to fall as if nothing had happened.
The author criticizes that while the core factor in determining real estate prices, both then and now, is 'finance,' the political world, the media, civic groups, and experts are leading populism in the real estate market by suggesting different measures.
The author says that the government has become entangled in this populism, and the Moon Jae-in administration has not been able to escape it either.

So, what are some representative examples of real estate populism? "Quantity populism," or the fear of a shortage of supply.
Every election season, politicians all make promises to build 0 million homes.
However, the author criticizes that while he understands the intention to reassure the public by promising more supply, this is nothing more than a numbers game.
They seem to have little interest in what kind of housing is supplied, where, how, and to whom, and only make populist promises.
They say that even promising supply like this will not control housing prices, and that policies should now be implemented to improve the quality of housing rather than the number of units.

Next, there is ‘half-price apartment populism.’
It has been advocated by progressive civic groups and experts for over 20 years, but it has now become a program favored by conservative politicians as well.
This also appears every election season.
But the author speaks firmly.
This is just a lottery or a show business that only benefits a few.

‘Tax populism’ is also discussed.
Tax issues are a very important element in real estate policy, but in Korean society, they say, they have been reduced to a political framework, a term for supporters.
It is a term that aims to appease the people's anxiety and dissatisfaction rather than policy rationality.
Among real estate taxes, some can be changed or must be changed depending on the economy, while others must maintain a certain level by norm. The problem, they point out, is that these principles have not been followed and have been changed from time to time.

When such populism runs rampant, real estate policy is bound to be shaken.
Especially during a period of rapid real estate price growth, various prescriptions such as “leave it to the market,” “recover unearned income,” and “disclose the cost price” become rampant, and the government also loses its balance and gets caught up in this.
The more this happens, the less trust there is in the policy, and the more anxious the people become.
The same goes for the effectiveness of the policy.
The Moon Jae-in administration also followed that process.
The author's analysis is that while the necessary liquidity reduction was avoided, we were pushed into things that would be difficult to achieve immediately.
This phenomenon is also occurring in the current Yoon Seok-yeol administration.

What should we do?
Lessons to be learned from the Moon Jae-in administration's setbacks

So what should we do? Is a real estate policy unswayed by populism impossible? The author argues that we must learn from and reflect on the Moon Jae-in administration's setbacks.
During the Moon Jae-in administration, real estate policies have fluctuated depending on the economy and the demands and pressures of the political world.
In other words, real estate policy has become an arena for a frame war.
The author argues that even if real estate prices fluctuate, Korean principles regarding the roles of the market and government must be established.
In doing so, he lists the following ten things to learn from the Moon Jae-in administration's failures.

① Our country has unique real estate issues and culture.
② The core of the global real estate problem is the financialization of housing.
③ There is the market's work and the government's work.
④ There are rules that must be observed in the real estate market as well.
⑤ Demand is fast and supply is slow.
⑥ Depending on the game, there are policies that need to be changed and those that do not.
⑦ Let’s break free from the addiction to real estate populism.
⑧ Experts must also take responsibility.
⑨ Now, the government should stop making promises to control housing prices.
⑩ The real estate problem must be solved, and will be solved.