Government criticised for proposed real estate watchdog

13-Aug-2020 Intellasia | KoreaTimes | 6:02 AM Print This Post

The government is facing some setbacks over a proposed idea for establishing an agency aimed at overseeing the overall housing market, as its establishment ? if it actually happens ? would increase government intervention.

Unsurprisingly, opposition leaders slammed the tentative idea, while presidential aides and ruling party lawmakers stressed the necessity of the proposed Real Estate Supervisory Service.

Rep. Kim Sang-hoon of the main opposition United Future Party raised questions about the envisioned agency, Wednesday, saying the current “response team against illegal practices in the real estate market,” which is likely to be transformed into the new agency, has rarely uncovered such practices since its establishment in February.

According to data the Ministry of Land, Infrastructure and Transport gave to the lawmaker, in 110 cases the ministry’s taskforce investigated, 55 led to acquittals. Among the remaining half, only three resulted in only lenient punishment.

The land ministry organised the taskforce under the supervision of First vice minister Park Sun-ho to investigate the real estate market for any criminal activities and collect information about these. The taskforce included representatives from the prosecution, police, tax agency and financial regulators.

Some opposition lawmakers claimed the government’s plan to launch the Real Estate Supervisory Service may possibly cause concerns and alarm among the public.

Citing other government intervention in other countries’ housing markets to prevent speculation, the government is planning to set up the new regulatory body.

Lee Ho-seung, senior presidential secretary for economic affairs, supported this plan, saying in a recent radio interview that the real estate watchdog would play an important role for market stabilisation, if established. But he denied a rumour its workforce would employ 2,000.

Rep. Jin Sung-joon of the ruling Democratic Party of Korea also called for the establishment of the Real Estate Supervisory Service with powers similar to those of the Financial Supervisory Service (FSS).

“Considering 80 percent of assets owned by Korean households are real estate, it is necessary to establish a real estate supervisory agency larger than the FSS which monitors the stock market and the financial industry,” he said in a separate radio interview. “The temporary taskforce under the land ministry cannot cope with the market disruptions properly.”

The remarks came as the nation’s housing market has not shown any signs of stabilisation despite the administration’s 22 regulatory measures.

According to data compiled by housing information provider Real Estate 114, the average price of apartments in Seoul at the end of July surpassed 1 billion won ($843,000) for the first time in history. This was nearly double the 517 million won in 2013.

Experts warned that the new agency could exacerbate the current situation.

“Although the FSS has been able to oversee the real estate market and the government introduced a special judicial force to crack down on unlawful practices, there has yet to be any significant achievements,” Myongji University real estate professor Kwon Dae-jung said. “This is because the housing price hike resulted from undersupply, not illegal acts.”

Amid growing concerns, deputy prime minister and Finance minister Hong Nam-ki discussed with relevant ministers measures to prevent real estate market disruptions.

The measures included strengthened crackdowns by the police and the tax agency against the overheated real estate market in the Seoul metropolitan area and Sejong, but the establishment of the real estate watchdog was not on the agenda for the meeting.

“As the government has discovered multiple suspicious transactions of high-priced homes, we are investigating whether there were any illegalities,” Hong said. “We will announce the results in August and will impose fines on illegal practices.”


Category: Korea

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