Lunar New Year clash highlights systemic flaws in President Lee’s real estate policies, experts say
President Lee Jae Myung and People Power Party leader Jang Dong-hyeok exchanged heated arguments over the president’s real estate policies during the recent Lunar New Year holiday. As President Lee repeatedly emphasized the need to regulate multiple homeowners on X (formerly Twitter), Representative Jang criticized him, urging him to stop pressuring multiple homeowners and the public. In response, President Lee, who stated, “I own only one home,” targeted Jang, who owns six properties in Seoul and other regions. Jang then countered, “Isn’t the president himself holding onto the ‘Bundang Reconstruction Lottery,’ which is expected to yield a market price gain of 5 billion Korean won after retirement? Please first clarify how you plan to handle your own lottery.” The dispute between the two is summarized as a clash between a single high-value property expected to generate a 5 billion Korean won profit and multiple homes with a combined publicly announced price of 850 million Korean won.
The political sphere largely dismisses the debate as an empty and unproductive real estate argument. However, economic experts argue that this controversy exposes serious flaws in President Lee’s real estate policies. Their reasoning includes: ① To stabilize housing prices, measures targeting high-value single homes must precede or at least coincide with policies for multiple homeowners; ② Considering the upcoming tax bill issuance schedule, the government should immediately present fundamental reforms like property tax restructuring but is hesitating due to election concerns; ③ While President Lee pressures multiple homeowners via social media, uncertainty in the market is growing as transaction parties delay contracts amid unresolved policies for high-value single homes; ④ The government’s delayed announcement to end the postponement of heavy taxes on multiple homeowners during last year’s price surge has exacerbated this year’s chaos; ⑤ The government is shifting blame for policy failures onto multiple homeowners; and ⑥ The president, who holds decision-making power, is attacking the opposition leader for demanding fundamental alternatives while avoiding policies directly tied to his own interests, thereby misleading the public. Why are these criticisms emerging?
President Lee Jae Myung’s Housing Policy Goals
The goal of President Lee Jae Myung’s housing price stabilization measures is to shift housing from being an investment or speculative asset to its original purpose: residential use. Borrowing economists’ terminology, this means transforming housing from a capital good (investment asset) aimed at increasing wealth through price appreciation to a consumer good where wealth decreases through consumption. Clothing, food, and housing (the three essentials) are representative consumer goods. While clothing and food are classic consumer goods that reduce wealth upon consumption, housing retains characteristics of a capital good in some areas, as prices often rise despite residential use. Why?
Housing comprises buildings and land. Buildings depreciate over time, losing value. Land, however, retains permanent value without depreciation. During redevelopment or reconstruction, land serves as a raw material (capital good) contributing to new value creation. For example, if an apartment purchased 40 years ago for 1 billion Korean won (500 million won in land, 500 million won in building) is now valued at 4 billion won, the building’s depreciated value is zero, and the land’s value is 4 billion won. The land price has risen by 3.5 billion won.
Thus, if President Lee’s policy aims to eliminate housing’s investment demand (capital good) and transition it to residential use (consumer good), long-term government policies combining supply-demand measures must reduce land price appreciation to zero. This would mean those consuming expensive homes face greater wealth reduction due to building depreciation, while those in cheaper homes see less reduction. Areas with government-funded infrastructure — wide roads, subways, libraries, schools — already reflect these disparities in housing prices. Experts argue that residents in such areas and neglected, deteriorating regions should experience differing rates of wealth reduction to ensure fairness. If someone eating expensive steak daily sees their wealth grow faster than someone eating kimbap, steak becomes an investment asset, not a consumer good. However, current tax laws treat land and buildings as a single entity for tax bills, leading to policies adjusting combined publicly announced prices rather than separating land and buildings. President Lee envisions a policy shift: stabilizing housing prices to reduce wealth gaps and replacing housing as the sole retirement safety net for workers since the 1960s with alternatives like pensions.
How Much Should Housing Prices Fall?
How much should housing prices stabilize through supply expansion and demand suppression? President Lee has not specified a target. However, experts highlight the Price-to-Income Ratio (PIR) as a key metric. Even if housing prices rise, a more significant increase in workers’ income indicates market stability, making relative ratios critical.
According to KB Real Estate data, Seoul’s apartment PIR was 10.6 in the third quarter of 2025. This means a median-income couple living in a Seoul apartment would need 10.6 years of savings without spending to purchase a median-priced apartment. If they spend half and save half, it would take 21 years. During Lee Myung-bak’s presidency, when housing prices were most stable, the PIR was around 7.5. To match that stability, current prices must fall by approximately 30%. A 3-billion-won apartment would drop to 2.1 billion won, and a 30-billion-won apartment to 21 billion won. Some argue high-end homes, which have driven overall price increases, need a 40% decline.
A more aggressive benchmark exists: an IMF recommendation that Korea, as a resource-poor, labor-driven economy, should aim for a PIR of 5. Under this, a 3-billion-won apartment would fall to 1.4 billion won, and a 30-billion-won apartment to 14 billion won. This daunting task confronts President Lee.
Policy Flaws Exposed in the Debate
Experts identify several issues in President Lee’s recent real estate policies:
First, the focus is on pressuring a minority of multiple homeowners (14% of Seoul’s 372,000 homeowners in 2024) rather than addressing systemic issues. The main driver of price increases is high-value single homes in Gangnam, fueled by low property taxes and large long-term holding tax exemptions. Policies should prioritize these homes. Pressuring multiple homeowners may push them to sell non-Gangnam properties, but Gangnam buyers with stock profits sustain prices.
Second, homeowners hesitate to sell or buy due to unclear tax policies. President Lee revived Moon Jae-in’s heavy capital gains taxes and Roh Moo-hyun’s mortgage recall plans but has not presented reforms for single-homeowner taxes or capital gains, causing market uncertainty. A Gangnam resident remarked, “Selling now risks huge losses if prices rebound after policy changes.”
Third, last year’s supply measures during the price surge lacked effectiveness. Experts argue the government should have announced tax hikes to increase listings. Delaying these measures and expanding land transaction permit zones exacerbated confusion. Past presidents gave 6-12 months’ notice for policy changes, but President Lee’s last-minute adjustments caused chaos.
Fourth, President Lee confuses policy priorities — mixing high-value homes, multiple homeowners, land transaction permits, and tax hikes — then shifts blame to the opposition and multiple homeowners. If he had first addressed high-value homes, Jang’s criticism would lack grounds.
Fifth, multiple homeowners acted rationally under existing policies, yet President Lee demonizes them. Experts argue this approach undermines policy fairness and trust. Capital flows to high returns; blaming investors without systemic reform is counterproductive.
Sixth, reform pace is too slow. Presidents typically push major policies in their first year, with expansions in years two and three. With only two years left and elections in 2028, President Lee must finalize reforms by mid-2025. Tax reforms, critical for price stability, require legislation by May to affect this year’s bills. However, President Lee’s silence suggests policies may follow June’s local elections, risking implementation delays. Tax reforms need 3 years to stabilize, but political cycles may hinder this.
President Lee’s Challenges
Experts propose simultaneous measures: ① Expanding tenant protections to prevent landlords shifting taxes; ② Reforming long-term holding tax exemptions for single-homeowners to a lifetime 200 million won cap; ③ Significantly increasing property taxes to reduce speculative demand; ④ Shortening the temporary two-homeowner exemption from 3 years to 3 months. These could create synergy. President Lee vows to tackle unearned real estate gains, but homeowners remain skeptical due to slow, narrow actions. Markets now cite “the highest authority’s remarks” as the biggest risk factor.
