Oh Se-hoon calls Lee Jae-myung's housing crash prediction 'absurd'

Seoul Mayor Oh Se-hoon on Monday said it was "absurd" for President Lee Jae-myung to predict a collapse in housing prices, adding that real estate problems "cannot be solved by threatening the public."

Oh posted a message on Facebook titled "The president's grasp of real estate reality leaves me speechless," saying that while Lee's prediction of a housing price crash was absurd in itself, the three factors Lee cited as its basis — "early mass supply," "curbing speculative demand," and "a surge in loan defaults and foreclosure auctions" — "clearly reveal that the president still does not see the real estate market and the realities of people's livelihoods clearly." On Sunday, Lee wrote on X, formerly Twitter, that he had ordered officials to prepare a system to purchase large volumes of homes below a certain standard for use as public housing, in anticipation of a possible housing price collapse driven by early mass supply, suppressed speculative demand, and a spike in loan defaults and foreclosure auctions caused by high interest rates.

Oh said it would be "a grave mistake" to characterize the government's supply announcements as "early mass supply" when they lacked concrete schedules or implementation plans. "Plans for which even ground-breaking within the presidential term is uncertain cannot stabilize home prices or give the public confidence that supply is coming," he wrote. "Far from a housing price crash, they only invite doubt as to whether the government actually has the will and capacity to deliver housing."

Oh said Lee had pointed to rising foreclosure listings due to loan defaults as if they were a harbinger of falling home prices, but argued that more foreclosure listings do not automatically push prices down. To assess price trends, he said, one must look not only at auction clearance rates but also at the ratio of winning bids to appraised values. He noted that Seoul apartment auction bid-to-appraisal ratios stood at 101.0 percent in July, exceeding 100 percent for four consecutive months, meaning properties in Seoul were selling above their appraised values even as more units entered foreclosure. "The auction indicators the president asked us to pay attention to are not signs of falling home prices — they show Seoul's deep pool of waiting demand and its serious supply shortage," he said. He then said the president's reading of loan defaults and foreclosures was "gravely worrying," stressing that not every homeowner whose property ends up at auction is a speculator who borrowed recklessly to buy. "Rather than welcoming a flood of foreclosure listings as a signal of a housing price crash, the president, as the person ultimately responsible for national governance, should feel the weight of responsibility before the suffering of citizens who have no choice but to put their homes up for auction," Oh said.

Oh said he could not help but suspect there was another motive behind the president's remarks. "Could it be that, with no substantive supply measures to announce right now, the president is personally invoking a 'housing price crash' to instill fear in the market and squeeze homeowners into listing their properties?" he asked. He added that real estate "cannot be solved by threatening the public," and that repeating the slogan of "crushing speculation" would not make the market move as the government wished. "A market where demand and supply, interest rates and finance, buying and leasing are intricately intertwined must be handled with accurate data and a clear-eyed grasp of reality," he said.

cook@heraldcorp.com