– Writing by Jeong Ji-ae
Hey guys this is Frank! It’s been raining for consecutive weeks. In times like this, many people decide to stay in and just enjoy relaxing time at home. Speaki
ng of which, today’s topic is going to be about our most familiar yet one of the most complicated issues; our house. These days lots of people are struggling with the sluggish housing market.
Unstable housing market cause great deal of influence in our economy. When the housing market is in good state it tends to support our economy for the better but once it takes a down turn, the general economy has to suffer. Around April 1st, the Blue House came up with numerous ways to normalize the sluggish housing market and those include firstly, cutting down the number of public housing units that are located on state-owned land to 20,000 from 70.000 per year. The aim is to maintain the balance of supply and demand of houses in the market. In addition, it will also reduce the number of public housing units built on those territories to less than 60 square meters. This measure is expected to give more opportunities for the low- income households to purchase houses.
Secondly, the government announced to liberalize the numerous housing regulations such as reducing the taxes on housing transactions and removing additional taxes to those who have more than one house. The government will also excuse first-time homeowners to pay for acquisition tax base on their income level. For example, if a couple wanted to purchase a house and their income were to be less than 60 million won per month and purchases a house smaller than 85 square meters with less than 600 million won, they would be exempt to pay the acquisition tax. Along the same line, the government also plans to ease qualification requirements concerning governing loan assessment. The assessment process was a lot tougher before. However, in order to expose more people in receiving financial assistance, the regulation was liberalized. Not to mention, the increase in number of ‘house poors’ led the government to settle with those decisions.
‘House poor’ is a terminology that indicates those people who have hard time paying for their mortgage after lending money from the bank. To make the situation harder for the ‘house poors’, as our economy is going through a difficult time they are being economically cornered. The debt they need to pay back becomes even more of a serious issue due to increase in interest rates and following inflation. Thus, they need to pay more than they borrowed and that worsens household debts. The measures that the FSC proposed intend to support ‘house poors’ as they have deep linkage between house hold debts and the activeness of general Korean market.
To look at the bigger picture, we can say that there are three big ways of stimulating the sluggish housing market. First would be the 4.1 house market normalization measures. Second can be those measures that specifically target on helping out the ‘house poors’ and last is numerous ways of improving living environment for those who reside in unsuitable places such as vinyl house, PC room, container box and so on.
In this writing, we only focused on the 4.1 house market normalization measures but it is always good to keep in mind that there are other options that could possibly contribute in boosting the house market in Korea. The most essential point is to reduce the household debts and create more favorable place for people to live. Housing issues remain to be one of the most common yet frustrating problems in our society. With the help of normalization measures, hopefully the Korean housing market will improve for the better.