The average sale price of a home in the greater Seoul area shot up from 341 million won ($274,000) in May 2017, when Moon was inaugurated, to 626 million won ($503,000) as of March 2022, according to the Korea Real Estate Board.
The average cost of a Seoul apartment, the most sought after type of property in South Korea, climbed to greater heights still, rising from 607 million won ($488,000) to 1.2 billion won ($944,000) over the same period, according to KB Kookmin Bank data.
Moon, a former human rights lawyer who campaigned on closing the gap between rich and poor, made stabilising housing prices a key agenda of his administration, implementing more than 20 related measures, including raising taxes and constraining mortgage loans.
“Our government’s resolve in stabilizing the housing market, protecting actual demand, and controlling speculation is firm,” Moon said in his New Year’s speech in 2020.
In a 2020 survey by the Korean Economic Association, more than 70 percent of economists who responded said the administration’s policies, which focused on trying to tame speculation rather than increasing housing supply, made the situation worse.
“Designating certain areas as ‘speculation-ridden areas’ and introducing a permit system for transactions sent a signal to people that the prices will go up,” Kim Jun-seong, a professor at Kyung Hee University in Seoul, said in a response to the survey.
“This wasn’t something the government, which has more information than individual market participants, should do, and I believe this affected the housing price surge a lot.”
Despite being aimed at cooling prices, some of the government’s mortgage policies have been blamed for making it difficult for would-be buyers who might otherwise be able to afford a home.
Moon’s administration cut the loan-to-value ratio – the amount a buyer is allowed to borrow relative to the price of a property – in Seoul from 70 percent to 40 percent for properties valued up to 900 million won, with the ratio further reduced to 20 percent for amounts in excess of the 900 million won threshold.
An analysis of the 2020 Korea Housing Survey shows that house ownership nosedives in people younger than 40. “The housing ladder for the Korean middle class had been somewhat stable for those born in the 1970s,” Cho Gwi-dong, an independent economic researcher said.