Oh Se-hoon Says Lee Jae-myung's 'Housing Price Crash Preparedness' Shows 'Staggering Lack of Real-World Awareness'

[Financial News] Oh Se-hoon, the Seoul mayor, criticized President Lee Jae-myung's remarks about the possibility of a "housing price crash," saying, "The approach to the real estate issue is wrong from the start."
On the 31st, Oh posted on Facebook under the title, "I am stunned by the president's understanding of the real estate situation," and made the remarks. He began by saying, "Yesterday (the 30th), the president said on social networking service that he was preparing for a scenario in which housing prices could collapse due to early large-scale supply, suppression of speculative demand, and a surge in loan delinquencies and auctions caused by high interest rates."
Earlier, Lee had instructed officials to prepare a system under which the government would buy up large numbers of homes below a certain price threshold and use them as public housing if housing prices were to plunge.
Oh pointed out, "It is absurd to begin with to predict a housing price crash, but the grounds he cited — 'early large-scale supply,' 'suppression of speculative demand,' and 'a surge in loan delinquencies and auctions' — clearly show that the president still does not properly see the reality of the real estate market or people's livelihoods."
He added, "If you think the government's supply announcements, which only make loud promises without showing a concrete timeline or execution plan, amount to 'early large-scale supply,' that is a serious misunderstanding. Plans that are uncertain even to break ground on during the current term cannot stabilize housing prices or give the public confidence in supply."
He went on to say, "Is the president perhaps viewing the recent drop in asking prices for some listings in the Gangnam area as a result of 'suppressing speculative demand'? If you judge a temporary reduction in asking prices for some ultra-high-end homes ahead of punitive taxes and a reduction in long-term capital gains deductions as a broad market decline, that would be a major misjudgment."
He argued that housing prices are actually rising in outlying parts of Seoul, leading to a process of price convergence. If that is being evaluated as a policy success, he said, then the government is either being given false reports or is turning away from reality.
Oh also stressed, "An increase in auction listings does not automatically mean housing prices will fall." He added, "To judge price trends, one must look not only at the winning bid rate, but also at the winning bid ratio, which shows the actual sale price relative to the appraised value."
"Real estate is not something that can be solved by threatening the public. Repeating slogans about 'cracking down on speculation' will not make the market move as the government wishes," he said. "A market where demand and supply, interest rates and finance, and sales and leases are all intertwined must be handled with accurate data and a clear-eyed understanding of reality."
He concluded by saying, "Even now, the government should fully reconsider its misguided real estate policy stance and choose the straightforward path of actually supplying homes where the public wants them."

[email protected] Jeon Min-kyung Reporter