Choi Kyung-hwan, Who Once Urged Buying Homes on Debt, Slams Government Real Estate Regulations as 'Crazy'
Former Deputy Prime Minister Choi Kyung-hwan criticized the Lee Jae-myung government's capital-area mortgage lending regulations as "crazy regulation" at a forum held at the National Assembly on the 11th, diagnosing the capital region's real estate market as being at the level of a "housing crisis." Choi spoke as a panelist at a seminar titled "Should Have Borrowed to Buy a Home Back Then," hosted by the Capital Area Housing Innovation Forum at the National Assembly members' office building in Yeouido, Seoul. The forum is co-chaired by Rep. Cho Jung-hoon of the People Power Party and Rep. Lee Jun-seok of the Reform Party. Appearing at the National Assembly for the first time in nine years, Choi said, "Many citizens are suffering over real estate issues, and I heard many people joking, 'Let's bring back the days of Choi Kyung-hwan when we should have borrowed to buy homes,' so I came."
The former deputy prime minister assessed the current real estate market as being at the level of a "housing crisis." He argued that high-end homes are being hit with a tax bomb, mid- to low-priced home prices are rising, and rental costs have also surged. Regarding the cap on mortgage loans for homes priced at or below 1.5 billion won (about $1.1 million) at 600 million won in the capital region and some other areas, he said, "No one who understands the economy could impose such a regulation."
He also pointed out that lending regulations are blocking ordinary people's housing upgrades. "Housing mobility means jeonse tenants save to buy a small home, then save again to move up to a mid- to low-priced home — that's the housing ladder," Choi said. "Blocking loans has cut off the housing ladder entirely." He argued that since new housing supply takes around 15 years, supply can only be achieved by activating transactions of existing homes.
Regarding President Lee Jae-myung's past remark that "normalizing the real estate market is easier than fixing illegal facilities in valleys," Choi said, "It is far more difficult than cleaning up valleys, but it was approached too easily, and that's how this problem arose."
A return to the podium 12 years after "buy a home by borrowing" The label that has followed the former deputy prime minister dates back to July 2014. At the time, he emphasized the possibility of jeonse tenants switching to buying, saying, "Jeonse prices stand at about 70 percent of sale prices, so with just 30 percent more, you can buy a home." The government loosened the loan-to-value (LTV) ratio and debt-to-income (DTI) ratio to 70 percent and 60 percent, respectively, and the policy came to be called "Choinomics" after his name. However, the policy was criticized for increasing household debt and for being a stimulus measure reliant on real estate.
