'Metropolitan concentration, supply cliff, loan expansion are root causes'

'Expand supply financing, curb demand lending'

President Lee Jae Myung holds a press conference at Cheong Wa Dae's Yeongbingwan on Friday. [Yonhap]
President Lee Jae Myung holds a press conference at Cheong Wa Dae's Yeongbingwan on Friday. [Yonhap]

President Lee Jae Myung on Friday blamed the recent surge in home prices in outer areas such as Gangbuk on the concentration of population and resources in the greater metropolitan area, a sharp drop in construction permits under the previous administration, and the entrenched belief that real estate prices never fall. He pledged to accelerate housing supply through reconstruction, redevelopment and urban renewal.

Lee made the remarks during the question-and-answer session of his seventh press conference since taking office, held at Cheong Wa Dae's Yeongbingwan. Responding to a question on real estate, he said breaking free from what he called a "real estate republic" was his administration's top priority.

Lee first cited the concentration of economic activity in the greater metropolitan area as a structural driver of rising home prices. "All economic power, infrastructure and living conditions are converging on Seoul, Gyeonggi Province and Incheon," he said. "That is precisely why we are putting every ounce of effort into balanced national development." He also cited past policies that encouraged people to take out loans to buy homes, a sense of relative deprivation among those who did not, and excess liquidity generated as the nominal growth rate surpassed 20 percent in the second quarter as compounding factors.

On the near-term supply shortage, Lee directly assigned responsibility to the previous administration and the Seoul Metropolitan Government. Citing 2022 — the year former President Yoon Suk Yeol and Seoul Mayor Oh Se-hoon were elected — he said the number of permits and ground-breakings was cut in half from that year onward. "In 2022, 2023, 2024 and through 2025, supply was slashed by nearly half. That is the short-term cause," he said.

On recent market trends, however, Lee offered a more optimistic reading. "Fortunately, prices have started to fall in areas including Gangnam and the decline continues to spread," he said. "Gangnam is at the top and other areas are lower — it looks as though a kind of leveling is under way."

Lee underscored rapid supply expansion as the central solution for market stabilization. "We will increase supply as quickly as possible through land development, reconstruction, redevelopment and urban renewal, including building permits," he said. He added that the Prime Minister's Office was monitoring progress daily and that he himself received weekly briefings tracking specific sites.

Lee also reaffirmed his policy of expanding financing to support supply. Addressing critics who questioned why his administration was loosening credit while trying to cool home prices, he said the approach was a targeted one. "We are expanding financing as much as possible in areas that can increase housing supply," he said. "On the demand side, we are maintaining existing lending policies. Supply will increase substantially as a result."

"We will take every possible measure on regulation, supply and taxation, so the real estate market will gradually stabilize," Lee said. He added that the government was also developing detailed policies to address the difficulties faced by jeonse and monthly rent tenants caught in the transition.


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