The Korean Economic Forum
Two Issues of Government Policies Concerning Real Estate Market
Joon Koo Lee (Seoul National University)Year 2017Vol. 9No. 4
This paper deals with two subjects related to government policies concerningthe real estate market. The first one is about the issue whether our real estatemarket is stable enough to be left free without government intervention. Recenttwo administrations have scrapped almost all mechanisms which are meant tocontrol speculative bubbles in real estate market. As a result, speculativebubbles shocked some parts of national real estate market to a dangerous levelrecently. This experience clearly demonstrates that it is too early to deregulatethe real estate market completely.The second issue that is dealt with in this paper is the Comprehensive RealEstate Tax. There was a great deal of controversy over the tax which wasintroduced in 2005. A conservative administration which came to power in 2008scaled down the tax drastically, which resulted in the reduction of its revenue toalmost half of the previous level. Recently, the argument that the tax on realestate is more growth friendly compared to other kinds of taxes has gained muchsupport among economists. In this sense, strengthening the ComprehensiveReal Estate Tax rather than weakening it seems to be the right direction ofchange. This paper argues that strengthening the tax is beneficial in terms ofboth efficiency and equity.