Session 6: : Policy Evaluation Housing and Urban Policy
SPEAKERS
ㅇMark Shroder (Co-Editor of Randomized Social Experiments / Housing and Urban Development Specialist)
<” Why Should Korea Conduct Randomized Social Experiments in Housing Policy?”>
▸Importance of social experiments in Housing Policy Evaluation is emphasized.
▸Results of randomized social experiments on U.S. Housing Policy are explained.
▸It is recommended that that Korea, like the U.S., conduct housing policy evaluations through randomized social experiments.
ㅇSock-Yong Phang (Celia Moh Chair Professor of Economics at Singapore Management University)
<” Evaluation of Housing and Urban Policy in Singapore”>
▸Before implementing significant housing policies, it is crucial to assess their validity, risk management, and problem identification through small-scale pilot projects.
▸It is recommended that activities such as data analysis of price-setting policies for new housing and stabilization policies in Singapore’s housing market, for Korea.
ㅇKyung Hwan Kim (Professor at Sogang University / Former Vice Minister of Land, Infrastructure and Transport]
<”Evaluation of Housing and Urban Policy in Korea”>
▸Importance of data-driven policy evaluation in the housing policy and providing alternatives is emphasized.
▸Regular and continuous evaluation and widespread sharing of results are needed.
▸Importance of neutrality and independence of the evaluating body is emphasized.
▸Data quality and management systems for housing prices, transaction volumes, and mortgage loans should be improved.
DISCUSSION HIGHLIGHTS
CHAIR
Do-Yup Kwon (Advisor of Kim & Jang / Former Minister of Land, Transport and Maritime Affairs)
DISCUSSANT
Man Cho (Professor of KDI School of Public Policy & Management)
Won-Jae Lee (First Vice Minister of Land, Infrastructure and Transport)
ㅇWon-Jae Lee (First Vice Minister of Land, Infrastructure and Transport)_
-Stringent market regulation policies in recent years are now proving to be counterproductive. Various side effects and issues have emerged during the implementation process aimed at stabilizing house prices. These include issues like holding taxes, excessive transaction taxes, home purchase loan regulations, rent cap-related contract renewals, and price caps. Excessive taxation, in particular, has increased the tax burden on genuine consumers, while restrictions on home purchases by young individuals and newlyweds with limited assets have exacerbated wealth disparities.
-To address excessive regulations, we need to ease them to restore normal market functionality. Additionally, we must combine supply-smoothing policies with demand management policies to achieve the intended policy outcomes.
– It is essential to evaluate policies from the viewpoint of the ultimate policy beneficiaries, rather than solely focusing on expanding the supply or increasing housing benefits budgets. For example, the development of policies that integrate various social services, such as elderly and disability care, with the public rental housing system should be pursued, along with comprehensive advance analyses of their functionality.
-The government intends to generate more precise and detailed statistics for policy implementation and research. Using the recent ‘Safe Subletting App’ as an example, which provides diverse information to prevent subletting fraud and unauthorized subletting, it underscores the notion that this approach customizes statistics and data to meet consumers’ needs.
ㅇMan Cho (Professor of KDI School of Public Policy & Management)
-The establishment of PERI signifies a significant step in initiating policy evaluation in Korea.
-The most crucial aspect of policy evaluation is data. Good quality data is essential not only for evaluating policies after their implementation but also for policy design and monitoring. It is imperative that the results generated from this data are meaningfully employed in policy decisions.
-South Korea’s housing policy aims at market stability, which includes stabilizing housing prices and enhancing residential welfare. However, few countries prioritize housing price stability as a policy goal. The high volatility in housing prices following the 2008 global financial crisis had a significant impact on both the real economy and the financial system. Therefore, it is essential to address housing price volatility from a macroprudential regulation perspective.
– South Korea employs a wide array of policy tools concerning demand management, supply expansion, and residential welfare. In contrast, OECD countries use methods that have more direct influence on the utility of demand, such as housing regeneration support and tax reductions for homeownership.
-When applying regulations to the market, it is crucial to conduct in-depth empirical analysis based on data and evidence because regulations, like policy, tend to produce both intended and unintended effects.
– South Korea’s housing market is complex and involves lease, jeonse (lump-sum deposit), and monthly rent markets that operate opaquely in many respects. Therefore, when the government intervenes in the housing market, it needs to approach this matter with caution.
– To improve or modify policies, data-based evaluations are necessary. In the 1970s, the U.S. government ceased the supply of public housing and shifted its policy towards housing subsidies and promoting private sector-based long-term rental housing supply. South Korea should consider a similar policy direction in the housing sector, grounded in data-driven decision-making.
-Furthermore, it is emphasized that not only in housing but also in big data, including residential and non-residential real estate, data construction and sharing are essential. Data-driven innovation is required, and to realize such innovation, we need to reduce regulations and lower barriers to entry among the various sectors in the real estate industry.
<PERI, Policy Evaluation Research Institute>
