Reconstruction excess profit recapture raised at National Assembly land committee
Minister says price-stabilization effect must be weighed against property rights concerns
Year-end rate hike could deepen housing price decline, minister warns
Minister of Land, Infrastructure and Transport Hong Ji-sun said the reconstruction excess profit recapture scheme requires a comprehensive review that weighs its effect on housing price stability against concerns over individual property rights.
Speaking at the seventh plenary session of the National Assembly's Land and Infrastructure Committee on Thursday, Hong made the remarks after People Power Party lawmaker Kim Eun-hye called for abolishing the scheme to boost private housing supply and asked for the minister's position. "I don't think the reconstruction excess profit recapture scheme is something that can be judged as unconditionally right or wrong," Hong said, adding that while the scheme "clearly has a stabilizing effect on housing market prices," it also "involves infringement of individual property rights." "Those circumstances must be assessed comprehensively," Hong said.
Democratic Party of Korea lawmaker Ahn Tae-jun said it has not been empirically demonstrated that abolishing or easing the scheme would actually help expand housing supply or shorten delivery timelines, but added that discussions on improving the current method of recapturing reconstruction excess profits are needed.
In response, Hong said the ministry could not make a definitive statement but pledged that "if discussions move forward, the Ministry of Land, Infrastructure and Transport will also offer its views."
Hong also said Thursday that the housing market appears to be entering a downturn, pointing to a buildup of listings and a decline in transactions.
When People Power Party lawmaker Kim Mi-ae asked what evidence supported earlier remarks about "hopeful signs" of housing price stabilization, Hong said prices in the three Gangnam districts "have already been falling steadily" while the pace of gains in outer Seoul has been slowing. Hong added that if the benchmark interest rate rises toward year-end, the downward trend could deepen.
On instability in the jeonse and monthly rent market, Hong said "providing sufficient housing supply is the fundamental solution," pledging to continuously expand the supply of rental housing, particularly in the Greater Seoul area.
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