Kim Yong-beom, Chief Policy Secretary to the President, announced on the 22nd that the government will pursue rental supply restructuring to fill the gap that may arise from reducing leverage on multi-home purchases for investment purposes.
Kim posted an article titled "Public Credit Order and the Housing Market" on his Facebook page, stating that "the housing problem is not a matter of price but of structure."
"Leverage for non-residential multi-home purchases must be understood within the framework of externalities," he wrote. "During rising markets, profits accrue privately, but during downturns, losses can spread to society as a whole through deteriorating financial institution soundness and credit contraction. Profits remain with individuals while risks become structurally socialized—an asymmetry emerges."
Kim cited Japan's asset bubble collapse in the 1990s as an example, where excessive accumulation of real estate-backed loans led to a surge in bank non-performing loans as prices fell, causing prolonged credit contraction. "The 2008 U.S. financial crisis was essentially similar in nature," he analyzed.
"If investment-purpose leverage can transmit into financial instability, that risk cannot remain solely in the private domain," Kim emphasized. "What matters is not directly controlling prices but restructuring the system."
He added that "if signals such as risk-weight adjustments for investment-purpose home purchases, phased LTV reductions for non-residential multi-home loans, and differentiated maturity structures accumulate consistently, expected returns will be reassessed." This is interpreted as signaling forthcoming tax and loan regulation policies to adjust the leverage structure for speculative multi-home purchases.
Kim also noted that "if we reduce investment-purpose leverage, discussions on what will replace that gap must proceed in parallel." He explained that "if we only reduce leverage without institutionally guaranteeing medium- to long-term housing stability for homeless households, structural transition could breed further instability."
"Credit realignment must be pursued simultaneously with rental supply restructuring," Kim emphasized. "Fostering institutional operators providing long-term stable rentals, expanding public and quasi-public rentals, and systematically supplying long-term fixed-rate financing for residential purposes can serve as alternative pillars."
He continued: "Unlike credit premised on short-term investment gains, credit tied to long-term rentals and residential stability functions to buffer price fluctuations. Policies reducing leverage and policies expanding stable rental infrastructure must be designed to align rather than conflict."
Finally, Kim asked: "Is it truly sustainable to maintain the current leverage-dependent structure centered on apartments and non-residential multi-home ownership at the heart of credit expansion?" He emphasized that "credit order operating on a public foundation needs to be realigned toward prioritizing residential stability and macroeconomic stability."