'When did I say that?' Lee's sharp jeonse retort draws criticism from real estate experts

On YTN Radio's 'Cho Tae-hyun's Vivid Economy'

Han: 'He cut it off so abruptly — I heard helpless laughter from the audience'

Kim: 'The president needs to offer a diagnosis and prescription for the jeonse and monthly rent crisis'

President Lee Jae Myung answers reporters' questions at a press conference held at Cheong Wa Dae's banquet hall on Friday. [Yonhap]

Real estate experts have criticized President Lee Jae Myung for deflecting a question about the jeonse system at his Sept. 18 national press conference — saying the factual dispute he raised was beside the point — after his sharp retort of "When did I ever say it should disappear?" drew widespread attention.

On YTN Radio's "Cho Tae-hyun's Vivid Economy," broadcast Wednesday, Han Moon-do, an adjunct professor in the Department of Real Asset Investment Analysis at Myongji University, and Kim In-man, director of the Kim In-man Real Estate Economic Research Institute, discussed Lee's response to a question about the jeonse system during the press conference.

At the event, held at Cheong Wa Dae's banquet hall, a reporter from The Herald Business noted that Lee had previously described jeonse — a uniquely Korean rental arrangement in which tenants pay a large lump-sum deposit instead of monthly rent — as an informal financial system particular to Korea and had called it "a system that should gradually disappear," then asked whether he still held that view. Lee replied, "I recall saying it will disappear," before pushing back: "I said it will disappear — when did I ever say it should disappear? That makes the question meaningless. I'll leave it at that." He offered no further answer.

As a result, the public lost the opportunity to hear the president's assessment of the current jeonse and monthly rent crisis and what the government intends to do about it.

Kim In-man, director of the Kim In-man Real Estate Economic Research Institute. [Provided by Kim In-man Real Estate Economic Research Institute]

"The important thing is not whether he said 'it should disappear' or 'it will disappear,'" Kim said. "What we need is the president's current diagnosis of the jeonse and monthly rent crisis, his thinking, the direction forward, and a prescription. Without that, market participants have no way to form a judgment or find any psychological stability — and he offered nothing on that front."

Kim also raised the possibility that renters, finding no jeonse units available, might conclude they are better off buying than paying monthly rent. "If the jeonse and monthly rent market is not stabilized, I don't think housing prices in the outer parts of Seoul or the greater metropolitan area can be brought under control," he said. "If people are given enough stability in the rental market that they no longer feel compelled to buy, areas north of the Han River could stabilize surprisingly quickly."

Han Moon-do, an adjunct professor at Yonsei University, speaks as a panelist at the 2022 Herald Real Estate Forum, held at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, on the theme of the new government's real estate policy direction. [Photo by Lim Se-jun]

Han said he was taken aback by how abruptly Lee shut down the exchange. "The president cut it off so sharply that even I was surprised. When someone asks you a question, you should at least give five sentences in reply — but he just went stone-faced," Han said. "When he said that, I could hear helpless laughter from somewhere in the audience behind him."

Han went on to speculate about what prompted the reaction. "Thinking about why that answer came out so suddenly, I recalled that at a public real estate forum, the president had said quite forcefully that jeonse loans are one of the main drivers of rising home prices and that they need to be reined in," he said. "If you say 'jeonse should disappear,' the next step is monthly rent. Answer that question wrong and you get headlines saying 'ordinary people pushed into monthly rent.' He probably carries that trauma. So he cut it off preemptively."

"He had too much on his mind — he decided 'I can't let myself get dragged into this' and shut the whole thing down," Han added. "The jeonse loan tightening isn't gaining traction in the market, is it? I think he wasn't mentally prepared to answer while still wrestling with that problem, and that's why it came out the way it did."

jshan@heraldcorp.com