The effects of the June 13 Measures lasted for some time.
To begin with, houses are hard to buy without loans. The LTV restrictions centered on Gangnam were enough to shatter demand, and as the flagship apartment complexes entered a stable phase, the upward trend across Seoul slowed significantly as well.
Accordingly, people complained that only the cash-rich would grow even richer, but that was a case of knowing one thing and not the other.
[National Tax Service Investigation Bureau 3, Special Crackdown on Apartment Inheritance and Gifts!]
The government mobilized National Tax Service investigators on a massive scale and combed through every corner of the speculative overheating districts. They analyzed lifetime income data and thoroughly questioned how apartment purchase funds had been prepared.
Most people who could buy a home in Gangnam without a loan were those who had inherited money from their parents, so in the process, national tax revenue became even more solid.
Once even that remaining strand of demand from the cash-rich was crushed, Seoul housing prices remained flat for eight consecutive weeks, and the controversy over housing prices subsided once again.
[Sales Prices Under Control, But Jeonse Soars? Jeonse Prices Rise Sharply for Eight Straight Weeks!]
[Anxious, Unstable Jeonse Prices... No Listings in Gangnam’s Four Districts]
But economic regulations inevitably come with a balloon effect.
The June 13 regulations that crushed purchase demand unexpectedly led to a balloon effect in which jeonse prices skyrocketed.
[Opposition: “Did They Suppress Purchase Demand Just to Raise Jeonse Prices? Government Policy Is a Complete Failure!”]
[Ruling Party: “The Situation Is Stabilizing Sufficiently; Many Lease Laws Being Prepared in Case of Sharp Jeonse Increases”]
[Prime Minister Lee Chanho: “There Are Many Voices Inside and Outside the Party Calling for Tenants’ Rights; If Possible, We Will Propose the 2+2+2 Bill Within the Year”]
And as the ruling and opposition parties traded blows ahead of the Lease Act—
the “invisible hand” slowly began to loom over our real estate market.
Perhaps it was an entirely natural sequence of events. Supply had been blocked, but demand had not... The government had crushed demand for a very brief moment with the June 13 Measures, but that demand had never disappeared.
Korea was already a country where jobs, school districts, hospitals, infrastructure, and more were organized around Gangnam, and anyone would want to live near the Han River if given the chance.
There was no one anywhere who liked spending two hours a day in hellish subway commutes.
[Breaking News—Jeonse Prices Rise for 12 Consecutive Weeks!]
[Speculative Overheating Districts, Jeonse Prices Approach 80% of Sale Prices!]
[Korea Real Estate Board: “If the Gap Between Sale Prices and Jeonse Prices Narrows, Gap Investment May Become Prevalent...”]
[Housing Prices Stirring Again... Are Homebuyers Bypassing Loan Regulations Through Jeonse?]
When the effects of the June 13 Measures, which had been evaluated as the strongest regulations in history, wore off, Seoul real estate once again turned into a gambling den.
*
“God the Father... Oh, God the Father.”
The opposition party leader, a devout Christian, prayed again and again before the meeting began.
As expected, if one endured and endured, an opportunity was bound to come someday.
Did a politician necessarily have to be good at politics? If the other side did badly, those votes would naturally come to him, would they not? This time, too, that opportunity had arrived. The soaring jeonse prices had finally triggered purchase prices.
As the authorities’ loan regulations grew stricter, buyers began purchasing apartments through gap investment using jeonse. Since jeonse prices were over 70% in every regulated area, LTV had effectively become meaningless.
“Is everyone here?”
“Yes, yes.”
“Then let’s begin the meeting right away.”
The leadership of the Daehan Party gathered in one place, smiles blooming on their faces for the first time in a while.
“Supreme Council Member Park. What are housing prices like right now?”
“Yes. In all speculative overheating districts designated by the government, actual transaction prices have risen by around 30%.”
“As expected, I knew our people could do it. The loan regulations from June 13 were so harsh that even I thought prices wouldn’t rise for a while.”
“It was an act that treated the market far too lightly. Due to the rise in jeonse prices, the LTV regulations have lost their meaning. According to a Korea Real Estate Board survey, 80% of recent homebuyers were gap investors who purchased with jeonse attached.”
The floor leader, who had been listening from the side, added his own words.
“Chairman, I know I’m saying this now, but to be honest, I knew from the start it would turn out like this. We already experienced it during the Geupdongsan days, didn’t we? What’s the point of LTV regulations if you don’t regulate jeonse loans? In the end, it’ll just become an indirect investment route. But if they regulate jeonse loans too, the citizens of Seoul will riot, so this was a foregone conclusion.”
“Is that so? Then why didn’t you point that out during June 13, Floor Leader? Why did you stay quiet?”
“Would those bastards have listened just because I pointed it out? I figured I’d be the only one getting cursed at if I brought it up, so I just made some money too. Hehe.”
“Judging by your expression, you had some fun, didn’t you? How many units did you buy, Floor Leader?”
“Not many. Four.”
Laughter bloomed again in the conference room.
Though he belonged to the opposite party, as a member of the public, Kim Sangcheol was truly a president to be thankful for. Hadn’t he made everyone here filthy rich once again?
“Then since the topic has come up, let’s do a bit of a headcount. It’s obvious the ruling party will slap the multi-homeowner frame on us again, so we should prepare, shouldn’t we?”
“Yes, yes.”
“How many Seoul apartments does each member of our leadership currently own?”
The leadership glanced around cautiously and raised their fingers.
Most held up all five fingers, and some needed all ten.
“Mm, Supreme Council Member Kim has four, Supreme Council Member Park has five, Assemblyman Choi has five... Wait, Assemblyman Song, you bought ten?”
“Yes... It’s rather embarrassing. I have three children and five grandchildren, so I prepared one unit for each of them.”
“Wow, you’re the god of investment, aren’t you? Then does Assemblyman Song’s household have one home per person?”
“I’m embarrassed. Haha...”
The atmosphere in the conference room could not have been warmer.
Thanks to the recent rise in housing prices, the Blue House’s approval rating for state administration had hit rock bottom, and those present had made a fortune. For the first time since the death of the former president, spring had come to the Daehan Party.
“But Chairman. What should we do? If we’re going to give them a proper scolding at the National Assembly audit, I think we’ll need to put our own affairs in order too.”
At the floor leader’s question, the party leader’s expression turned serious.
“The Floor Leader is right about this. If we point this out at the audit a week from now, those bastards will definitely take issue with our multiple homes.”
“Yes, yes.”
“Three units. Let’s conscientiously keep exactly three each. One house to have our parents live in, one for a married couple to live in, and the last to pass down to our children. If we say we had no choice but to own three houses for those reasons, the public will understand to a reasonable extent. Please dispose of the rest.”
“Understood.”
“If anyone fails to follow this, the party will issue a serious warning.”
The party leader warned them with a stern face.
The National Assembly audit a week later was not the issue. Two months from now, there would be the Seoul mayoral election, regarded in Korea as a vice-presidential election.
The opposition party, which had suffered a crushing defeat in the last by-elections, absolutely had to win this local election, and fortunately, the mood was not bad.
If they criticized the Blue House’s failures at the audit and highlighted the now-hostile public sentiment, it seemed they might once again receive the choice of Seoul’s citizens.
Knock, knock.
When the tidying up of personal affairs was finished, the secretaries knocked and entered.
“Chairman, Mayor Min Seongcheol has arrived.”
“What are we supposed to do if the person who should be here is the latest?”
“I’m sorry... He said the water bus was delayed.”
“Good grief, one thing after another. Tsk. Tell him to come in.”
Before long, Mayor Min Seongcheol entered and bowed his head.
“I apologize for keeping you waiting. With the recent real estate issue, municipal affairs suddenly became busy.”
“Oh, not at all. We were just talking about that ourselves, in fact. Please, have a seat.”
“Yes.”
Min Seongcheol, mayor of Seoul.
Regarded for twenty years as a leading potential presidential contender, he had served as mayor of Seoul for two and a half terms, making him the undisputed President of Seoul.
And now, he was preparing for another leap.
His plan was to secure a third term in the local election two months later, then use that powerful administrative career as a foundation to enter the Blue House.
“You must be busy, so let’s get straight to the meeting. Mayor Min, what is the mood in Seoul like these days?”
“The worst. These days, everyone I meet is up in arms about real estate. But the government and ruling party seem to have no understanding of this public sentiment at all. Even yesterday, the Prime Minister’s Office was talking about expanding speculative overheating districts to all of Seoul, and I was simply dumbfounded.”
“What if the Prime Minister’s Office pushes ahead with it?”
“I will stand in their way with a decision to save the country. Whether I have to shave my head, go on a hunger strike, or stake my mayoral office, I will stop them no matter what.”
The party leader dissuaded him.
“Understood, understood. I understand your patriotic devotion, Mayor Min, but don’t stake your office.”
“Ah, that was just a figure of speech. I’m not really saying I’ll stake it. What kind of head of a local government would stake his office over an issue like this? For the sake of the voters who elected me, I must hold out until the end.”
“I’m glad to hear that. Which brings me to this, Mayor. Our leadership intends to begin work on the local elections from now on.”
Mayor Min swallowed.
“By work on the local elections, you mean...?”
“The National Assembly audit a week from now will be the watershed. The recent atmosphere is very good. If we take Seoul again in the local election two months from now, it will bring a tremendous change of mood for the party.”
“You are absolutely right. I think so as well.”
“So the plan is to point out the Blue House’s failures during the audit and carry this public sentiment through to the local election... To do that, we need your outstanding administrative ability, Mayor.”
“Please tell me. What should I do?”
“How should we bring down the recently risen housing prices in Seoul?”
Mayor Min thought for a while before continuing.
“This is actually a very simple problem. There is no need to think of it as difficult at all.”
“Is that so?”
“Yes. Housing prices are ultimately a matter of supply and demand, are they not? It was the same during the last Geupdongsan, and it is the same this time—the cause is entirely a shortage of supply.”
“Then what will you do?”
“I will abolish the numerous regulations surrounding Seoul right now and actively approve redevelopment permits. In fact, I have a history of working on the ground during the New Town project. Back then, when hundreds of apartments were sold in Eunpyeong-gu, housing prices were brought under control, and living facilities improved completely. Gupabal, which people said would never be developed until reunification, grew dazzlingly.”
The party leader smiled with satisfaction.
“Good. As expected, Mayor Min’s administrative ability deserves recognition.”
“You praise me too much.”
“But if Seoul redevelopment is loosened, there are many voices concerned about concentration in the metropolitan area. What kind of countermeasures do you have in that regard?”
“Mm...”
Mayor Min, who had been confident throughout, hesitated for a moment before answering.
“Well.”
He scratched his head.
“That will work itself out somehow, won’t it? In any case, that isn’t what matters right now. Seoul housing prices have risen, so we have to bring those prices down, don’t we? Demand won’t die just because they put out hundreds of regulatory proposals. The only thing that can capture this demand is massive supply.”
After being lost in thought for a while, the party leader opened his mouth.
“Very well. If we think too loftily, we may ruin an election that should be easy to win. Then during this National Assembly audit, we will point out the Blue House’s regulations on Seoul and do our utmost to ensure that supply expansion can be achieved.”