The presidential election season is upon us. With the announcement of the top 10 pledges from each party on May 12, the market is closely watching to see what real estate policies will emerge. However, the Democratic Party and the People Power Party have markedly different approaches to real estate policies in their pledges.

First, the People Power Party has promised to expand the GTX (Great Train eXpress) beyond the ABCDEF lines in the metropolitan area, adding new lines in Busan-Ulsan-Gyeongnam, Daegu-Gyeongbuk, Chungcheong, and Gwangju-Jeonnam regions. The plan aims to establish a "30-minute commute revolution" and innovate living environments through the expansion of metropolitan and urban railways. It also includes the development of five mega-city regions (metropolitan area, Chungcheong, Honam, Daegyeong, and South).

The People Power Party is also proactive on real estate taxes. They plan to reform the comprehensive real estate tax and abolish the heavy transfer income tax. The pledge also includes exempting acquisition taxes for houses outside the metropolitan area. There are innovative proposals for redevelopment projects, such as delegating authority for redevelopment and reconstruction to local governments, aiming to shorten the reconstruction process that currently takes over 15 years. They also propose completely abolishing the recapture of excess profits from reconstruction projects. Some of these contents were included in the August 8 measures of 2024, seemingly continuing the easing of redevelopment regulations that were halted after the December 3 martial law.

Supply policies are also included. The "333 Housing" plan proposes building 100,000 public housing units annually (500,000 over five years) where young couples can live for three years each after marriage and after their first and second child, totaling nine years. Additionally, they plan to supply an extra 200,000 units annually for young people, newlyweds, and families with children. This was the only major party to specify housing supply numbers. For young people, they include plans to ease loan regulations for first-time borrowers, including newborn loans, continuing the policy finance initiatives of the Yoon Suk Yeol administration. They also propose creating "white zones" that effectively nullify almost all regulations related to redevelopment projects.

In contrast, the Democratic Party's candidate Lee Jae-myung's top 10 pledges contain very little on real estate. They include improving guarantee systems related to jeonse (long-term deposit rent) fraud, expanding tax credits for monthly rent, and increasing the ratio and quality of public rental housing. Regarding Sejong City, they plan to complete the administrative capital and establish a living zone system of "5 poles and 3 specials" (5 poles: metropolitan area, southeast, Daegyeong, central, Honam / 3 specials: Gangwon, Jeju, Jeonbuk), which seems to align with the People Power Party's 5 mega-cities concept. They also mention expanding public rental housing supply for newlyweds.

Unlike the 20th presidential election where the Democratic Party pledged to supply 3.11 million houses, the 21st election pledges do not mention any specific supply targets. This change seems to reflect candidate Lee Jae-myung's stance against making unrealistic promises to deceive the public. However, the market expresses disappointment at the lack of information on stable housing supply, especially for public housing.

With this early election leading to a new government without a transition committee, various policies are expected to be discussed through ministerial briefings in the first 1-2 months after the new government takes office. This period might serve as the real transition period, determining which policies will be pursued by the new administration. While it's not necessary to focus solely on the top 10 pledges, the differences in real estate policies between the 20th and 21st presidential elections are noticeable.

Firstly, there's a lack of focus on supply. The 20th election was dubbed the "real estate election" due to the rapid price increases in 2020-2021, with both parties prioritizing "supply" in their policies. The People Power Party planned 2.5 million units, while the Democratic Party aimed for 3.11 million, including basic housing. In the 21st election, the People Power Party mentions 1.5 million public housing units over 5 years, while the Democratic Party doesn't specify any supply targets. This paradoxically suggests that the 21st election is not a "real estate election," indicating there are more pressing issues at hand.

Secondly, both parties have included pledges for balanced development of the metropolitan area and regional development, considering the low birth rate. The concepts of "5 poles and 3 specials" and "5 mega-cities" are similar. The People Power Party emphasizes "transportation" function through GTX, while the Democratic Party focuses on strengthening education and medical functions in regions through medical reform and reinforcement of local universities. This reflects a direction to enhance urban functions to prevent the exodus of regional workforce due to lack of jobs, transportation, medical, and educational facilities in regional cities.

Thirdly, both parties express concern about economic contraction. This early election, held after martial law and impeachment, is quite different from other presidential elections. Nevertheless, the Democratic Party's first pledge is "A Leading Economic Power in the World," while the People Power Party's is "Freedom-led Growth, A Country Good for Business," both prioritizing the economy. This reflects the current economic situation, with Q1 real GDP recording -0.2% and hovering around 0.1% throughout 2024. Both parties are preparing for this election with the economy as the top agenda, though their approaches differ.

The people's choice on June 3 will determine which policies will be implemented in the future. It seems no one knows better than the citizens what Korea needs. We look forward to the wise choice of the people.

(Sang-wook Chae, CEO of Connected Ground)

jsjeong@yna.co.kr

(End)

<Copyright (c) Yonhap Infomax, Unauthorized reproduction and redistribution prohibited, AI learning and utilization prohibited>

All content has been translated by AI.
Copyright © Yonhap Infomax Unauthorized reproduction and redistribution prohibited.