Moon Jae-in Ordered “House Price Supervision Organization”…Similar to Venezuela’s Chavez-style Price Control

2020-8-12, Chosun Ilbo [TRANSLATION]

Criticisms have been raised as “unreasonable market control to President Moon Jae-in’s announcement on August 10, 2020 that he will review the establishment of a “real estate market supervisory body” (부동산 시장 감독기구).

Amid increasing curiosity about the composition and operation of the real estate supervisory body, President Moon explained that it was “for the effectiveness of real estate measures,” but it is difficult to find similar cases in the world.

It was revealed that the government is considering establishing a new vice minister-level supervisory agency under the Ministry of Land, Infrastructure and Transport, which oversees housing policy. The government is scheduled to begin a full-scale discussion at the 2nd meeting of the relevant ministers for real estate market inspection on August 12, 2020.

According to multiple government officials on the 11th, the Minister of Land, Infrastructure and Transport Kim Hyeon-mi (김현미) suggested to the Blue House that a permanent organization should be created as there is a limit to the investigation with a task force type of “real estate market illegal activity response team.”  Currently, around 15 people are dispatched from the Ministry of Land, Infrastructure, and Transport, the office of Taxation, the office of the Financial Supervisory Service, etc. and the plan is to increase the scale to 70 to 80 people, and place a vice-minister level person in charge of it.  There is a possibility that the word “supervisory” will not be used in consideration of market or public backlash.  [Truncated]

It is rare to find a government agency that oversees the  entire real estate market, which is mainly traded between individuals.  Experts point out that as a similar case, President Hugo Chavez in Venezuela installed the “Fair Price Supervisory Service” (공정가격감독원) to monitor and supervise the prices of all goods, including houses.

Real estate experts were concerned about the establishment of an unprecedented real estate supervisory body.  It is pointed out that it will investigate “not only home sales, but will probably also investigate all real estate transactions, such as gift and inheritance” and “it could become a powerful body to control the citizens, using supervising real estate transactions as an excuse.”

Professor Shim Gyo-eon (심교언) of Konkuk University said, “If the supervisory body is actually launched, the real estate market will shrink and the number of transactions will drop sharply.”  He continued, “It may appear the real estate market is stabilizing in the short term, but in the long term, the capital, with nowhere else to go, could accumulate and hit like a Tsunami, and dramatically increase real estate prices.”