The rise in housing prices is prompting the current push for legislation, but it's actually the legislation that is causing the housing prices to increase. The assumption that increasing supply will stabilize housing prices is fundamentally flawed. What we need now are homes with rising prices, not a lack of actual homes. Therefore, the current logical structure is incorrect. 

Hello, I'm Lee Yeon-cheol, the director of the Apartment Cycle Research Institute. I'm with announcer Kim. Many people want to live in apartments in Seoul, but since there isn't much land available, the government has come up with a plan to promote redevelopment and reconstruction. This is known as the Redevelopment and Reconstruction Promotion Act. Today, we will discuss this topic. First, what is the Redevelopment and Reconstruction Promotion Act?

There is a meaning that suggests loosening the constraints or regulations so that more can be done. There is a phrase that has become popular among young people these days, which is Eoljuk, meaning even if you freeze to death, you'll want to live. Do you know it? Yes, I do. What does it mean? It means that even if you freeze, you'll want to live. The desire for new construction is so intense that there is no longer space to build in Seoul. This is why they seem to have introduced laws to promote redevelopment and reconstruction. I also looked into the details of this. It is not yet concretely realized; rather, they have presented some ideas on how it will be done. The key point is to reduce the procedures, combining the business implementation and management disposal plans into one.

It seems that the key elements are related to reducing procedures. From the perspective of those involved in business, it might be a good thing, but how do you view its effectiveness, Director? Well, anyway, the housing that is currently targeted may have been unable to proceed due to various blocked systems. If there are apartments or areas that want to push forward, I think there is a possibility that the speed of progress might increase a bit. I believe that is something I will discuss later. Oh, really? I understand. I'm suddenly very curious since you mentioned that you will reveal something in 60 seconds. Anyway, you are saying that you will activate reconstruction and redevelopment, and there is also a way to reduce the procedures as mentioned.

There are also ways to increase the floor area ratio, and increasing the floor area ratio means that you can build more, which could improve the business viability. However, we need to be cautious about increasing the floor area ratio because it can be seen as a special privilege. That's why there are talks about excluding the three districts of Gangnam. Right? So, they are aware that this is a privilege. Increasing the floor area ratio means that more buildings can be constructed at a greater height. This way, in redevelopment or reconstruction projects, the number of units can be increased. Then, apart from the units that the existing association will take, there will be remaining units available. These will be sold to the general public, right? When this happens, the revenue goes to the association members. So, the government is essentially saying that they will provide significant income for those apartments.

What do you think, Director? I believe the government should be fair. Right now, there is a phenomenon where certain individuals are being concentrated on to provide special deals in order to sell awards. If the government continues to facilitate these situations, people will demand more and create circumstances to receive benefits. Once the government accommodates one request, it can't refuse the next person, right? So, I think the government needs to be really cautious about creating such behaviors. However, seeing the government propose various measures to promote reconstruction and redevelopment makes me realize that they recognize the supply shortage. It seems like they are a bit anxious, which leads them to suggest these measures. Aside from legal means, are there any other alternatives? Director, I believe that supply...

I think there are shortcomings, and I believe that was a mistake. So, do you think that there's no need to create this law at all? The reason for the supply shortage is that housing prices are rising. Isn't that right? However, the assumption that housing prices will stabilize due to the measures taken is fundamentally flawed. I remember during the Lee Myung-bak administration, when a lot of houses were supplied in the Gangnam area, housing prices stabilized significantly. Considering that, I believe there is an effect when there is a large supply; housing prices can stabilize. This is what we call a generalization error. So, what error am I making? During the Lee Myung-bak administration, the market stabilized even without intervention. At that time, the market atmosphere was such that it stabilized, but the point you are making now is...

The story of Segok-dong and Gokdong is that in Segok-dong, the government is offering housing in Naegok-dong, which is referred to as half-price apartments. As a result, the prices in Gangnam have slightly collapsed. There are some people who say that if we increase the supply of housing, we can stabilize the housing prices. However, this is an example of the fallacy of hasty generalization. Currently, those who are advocating for this are actively increasing supply in other areas, yet housing prices are rising significantly. It has no effect at all. 

Where are they increasing the supply? The person who is advocating this the most is the current head of SH Corporation. While serving as the president, he claims that the government should supply apartments at a low price and that cost transparency and the application of price ceilings should be implemented for distribution. He supports this idea, so he is the head of SH Corporation.

Supply it at half price. But now, the entire area of Seoul has gone up. So, SH is currently supplying like this. The act of trying to control the market through supply is fundamentally wrong. So, do you think the current reconstruction and redevelopment promotion law is unnecessary in this situation? This shows how wrong it is because when reconstruction and redevelopment are activated, will the prices of those houses go up or not? Of course, they will go up. So, prices will rise even more, precisely because of this law. Right, right. So, we reach a logical contradiction: the law is being pushed because house prices are rising, but it’s this law that is causing the house prices to rise. It’s as if we’re just sitting still while unnecessarily igniting a fire. This is what we call a logical contradiction.

점검을 해야 되는데, 대부분의 사람들은 자신의 논리에 모순이 있는지를 몰라요. 그렇죠? 그러니까 여기에 가장 핵심적인 논리 모순이 뭐냐면 공급 부족이에요. 계속 꾸준히 소장님이 강조하시는 그거 아닙니다. 공급 부족 절대 아니에요. 수요가 일시적으로 많아지는 현상 때문입니다. 그러면요, 소장님, 만약에 수요가 일시적이 아니라 계속 많으면? 계속 많을 수 없어요. 진짜 이 수요는 왜 많아지냐면 집값이 올라가니까 그런 거예요. 그럼 집값이 안 올라가게 해버리잖아요. 이 수요는 완전히 사라집니다. 집값이 어떻게 안 올라가게 하죠? 정책으로 안 올라가게 하거나 오르는 것을 싹 환수하거나, 재건축 초과이익 환수제 같은 거죠. 그렇죠? 그냥 예를 들어서 양도세 100%라면 무서워요. 소장님, 지금 거기에는.

I hope that my house price will rise. This is an extreme expression, but for example, if we completely stop house prices from rising, then I believe that demand will disappear entirely. So, instead of presenting such a law, we need a policy or system that regulates demand. Right now, the demand consists of people who want house prices to rise. However, if we look at redevelopment and reconstruction, those systems support the increase in house prices. 

For instance, if we assume that through this, 10,000 units will be supplied, and if we also assume that the current demand is 10,000 units, then it balances out. However, that's not the case; in such a situation, the demand will not just stop at 10,000 but will increase to 20,000, 30,000, 40,000, or even 50,000. This is the trend we are seeing.

So, people are coming from all over the country, and the demand is concentrated in Seoul. Right now, there’s a misunderstanding about actual demand. There’s not even a single real demand. This situation arises because of the expected demand that is created to push housing prices up. If we reduce the expectations of rising housing prices, this demand will completely disappear. Then, there won’t be a supply shortage; there will be excess housing. 

However, if we look at it from a different perspective, we shouldn't just think about housing prices. When we consider Seoul alone, there are many aging apartments. Leaving housing prices aside, the phrase “I can’t live here anymore” seems to reflect a genuine feeling. I can relate to this a lot because I am currently dealing with older buildings, and it’s tough. It’s not just about “I can’t live here,” but the reality is that living in these older buildings is really difficult.

It's unbearable in winter when the boiler doesn't work for a moment. There are many houses like this, including apartments. There is a limit to how long we can keep living in these older apartments, so I think we need to quickly switch to new ones. From this perspective, isn't there a need for such a law? How long are we going to keep living in these old buildings? There are existing laws regarding development and reconstruction. However, the problem is that we can't just demolish everything and start anew. Logically speaking, it's difficult for me to live in these old buildings right now, but is it possible to tear down my house and build a new one immediately? That's impossible in all areas of Seoul. There are stages to this process, and just because we want to expedite it doesn't mean everything will happen all at once.

And then, after some time, new apartments will be built again, right? So, that person will say they can't live in that house again, which means that the desire for something more is not being fulfilled. If you keep trying to satisfy something that isn’t truly a need, it will only increase people's greed. The term promotion is a bit concerning, right? If we are just going to follow the existing laws, we should proceed according to the current procedures in place. There's no need to promote and ignite a rise in housing prices; that would actually be a misguided and contradictory policy. It's not that there’s nothing available; redevelopment and reconstruction can be done. Yes, it can be done. However, we need to consider the basis for reconstruction. When it comes to redevelopment and reconstruction, people often say they really can’t live there anymore. But in reality, they can live there. Saying they can't is actually a lie; they can live there.

There are places where you can live and buy at a reasonable price. People are living according to that. However, if we try to meet everyone's desires, the current desire is for housing prices to rise. If housing prices are not increasing, other desires will continue to emerge. The government says it is trying to control housing prices, but the reality is that prices are not stabilizing. The measures being implemented seem to consider only the supply side, while the demand remains fixed and is mistakenly perceived as genuine demand. 

For example, let's assume that housing prices in Gangnam do not rise at all. Would people still want to live in Gangnam? The belief that everyone wants to live in Gangnam is based on a different premise. The notion of Gangnam being invincible and desirable is a flawed assumption.

It's not that people want to, but the house prices in Gangnam are rising, right? That's why we have the saying Gangnam is invincible. That's true. So now people express it in different ways. I want to live there, but deep down, I hope the house prices go up. That's what I've been saying. However, the government interprets it literally, thinking, Ah, people want to live there. That's absolutely not the case. What we need right now are houses whose prices are increasing. The truth is, there isn't a real shortage of houses. The logical structure is flawed. Ah, listening to what you said, it seems we need to change the name of the law. The Reconstruction and Redevelopment Demand Promotion Act. You're looking at it this way, right? It's promoting demand in a way that's increasing the wrong supply.

It creates more situations like that, which raises questions about effectiveness. Therefore, we should not push forward with it. So today, we discussed the Redevelopment and Reconstruction Promotion Act, which is still a draft and has not yet passed. Nonetheless, we were able to examine the government's stance. We will return next time with more interesting and useful information. Please remember to like, subscribe, and set notifications, and leave comments. Thank you, everyone!

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