Investor That Can See The Future

Chapter 399

I got in the car and headed to Sejong City.

Sejong City is a new city created in Chungcheong Province for the purpose of preventing the concentration of the metropolitan area and achieving balanced national development. It was originally planned to relocate the administrative capital to the largest new town built outside the metropolitan area. However, due to opposition and lawsuits from the opposition, this plan was thwarted, and only half of the government departments were relocated, becoming a half administrative capital.

In any case, according to government policy, agencies directly under the Prime Minister have also moved to Sejong City. The Prime Minister, like other public officials, usually worked in Sejong City, except for business trips to Seoul, such as attending the State Council or National Assembly.

That’s why I’m going to Sejong by myself like this.

There were a lot of reporters waiting at the front door. As soon as I got out of the car, the camera shutters went off, and reporters rushed in and held out their microphones.

“Why did you ask to meet?”

“Do you have anything to say about the Korean economy?”

“Are you trying to convey an opinion from the US side?”

“Please say something to the people.”

As expected, the office staff, who were still waiting, blocked the reporters with their bodies.

Anyone who sees it would think that it would cause a social scandal and appear at the prosecution office.

The media has already made various speculations about the purpose of the meeting. I haven’t gotten anything right though. As always, ‘or not’, isn’t it?

Without answering, I walked into the building. As I had already made an appointment, the staff guided me right away without any special procedures.

Prime Minister Ryu Jeong-hoon welcomed me in his parlor.

“You’ve come a long way, you’ve worked hard.”

“no. You must be busy, but thank you for taking the time.”

He had a friendly and warm appearance, like the uncle next door.

The presence of the prime minister in Korea, which is a presidential system, is not so great. However, public recognition is at least the second in the administration in name and reality.

It would be a great privilege to be able to be alone with such a person like this.

Of course, I met the President of the United States, the President of China, and the President of Russia one after another, so there is not much excitement.

Just last week, I also met President Ronald.

We said goodbye and sat down. The staff served coffee and tea.

“Is this your first time coming to Sejong City?”

“Yes. The roads are wide and the buildings are clean.”

This can be said to be a characteristic of a new town built as planned.

“I enjoyed seeing President Ronald’s speech at the re-election ceremony. Thanks to CEO Kang Jin-hoo, the Korea-US relationship has become stronger. As a citizen, I thank you.”

“no. It’s what I love to do.”

Prime Minister Ryu Jeong-hoon gave a nice smile.

“When I heard that CEO Kang Jin-hoo was coming, there was a lot of talk here and there. I am also curious.”

“I will tell you about the business slowly. Before that, I have a few questions about government policy.”

“If I can give you an answer, I will answer it.”

I asked without hesitation.

“The current economic situation doesn’t seem to be very good, is there any government action?”

In fact, the Korean economy is in good shape only in terms of indicators. Semiconductors, batteries, and electric vehicles are doing well, and the Bank of Korea has raised its economic growth rate this year from 3 percent to 3.5 percent.

However, unlike high-tech industries and large corporations, the economy of the working class did not improve significantly. The reason is that the situation in manufacturing and construction industries with high employment is not very good.

He expected to ask questions about the economy, so he answered as if he had waited.

“In that regard, the government is also considering stimulus measures. We plan to promote corporate investment through tax reductions on investment and start construction of a large-scale SOC early. We also plan to support public housing projects and private redevelopment projects.”

“It’s just as it was announced.”

The construction industry has a very large employment-inducing effect. Therefore, each successive government has used economic stimulus measures by revitalizing the construction industry.

It was former President Park Si-hyeong who particularly liked this. He made the entire Republic of Korea a construction site and worked hard behind the scenes.

The New Politics Party, the opposition party at the time, strongly criticized it, and President Huh Chang-min declared that he would never become a “construction government.”

But looking at what I’m doing now, I have nothing to say even if I insult you.

I then asked a completely different question.

“Is there no change in the government’s will to control Seoul house prices?”

Prime Minister Ryu Jeong-hoon’s expression hardened slightly at my question. You may be wondering why I am suddenly asking such a question.

It is no exaggeration to say that the current government is at war with real estate.

It started at the end of the Park Si-hyeong administration. As part of the economic stimulus package, he loosened the loan restrictions, encouraging the public to openly say, “Be a butler by borrowing money,” and house prices, which had remained stable for a while, began to soar.

However, the problem arose after the change of government.

Contrary to the previous administration, the Huh Chang-min administration poured out various measures to stabilize house prices and root out speculation. Comprehensive real estate tax increase, reduction in transfer tax reduction benefits, taxation target expansion, reconstruction profit recovery, rental business registration regulation, loan regulation, etc.

Who will say that we will stop real estate speculation and recover unearned income?

But things done with good intentions can have bad results, and things done with bad intentions can have good results.

What happened is that after the government set out to raise house prices, house prices in Seoul soared to an all-time high. In fact, it can be said that the real estate policy has completely failed.

There are two main reasons. The first is that the concentration of population in the metropolitan area continues to intensify, and the second is that the supply has decreased due to regulations.

Prime Minister Ryu Jeong-hoon nodded slowly.

“of course. The government policy is that we will not tolerate real estate speculation.”

“By the way, haven’t house prices already skyrocketed against the government’s policy? It would be nice to say that it is now impossible to save up on salaries and live in Seoul.”

From the government’s point of view, should house prices rise or fall?

The answer is the same as price. Ideally, it should rise gradually in line with economic growth.

In fact, many people become happy while house prices rise. First of all, people who buy a house sit still and make big money. And as the construction industry is revitalized, construction companies also make money, and workers working at construction sites also make money. In addition, people in related industries such as real estate agents, moving, materials, interiors, and furniture also make money. Real estate prices rise, transactions become more active, and the government’s tax revenue increases.

The problem is that the side effects aren’t that great.

Again, real estate has a characteristic that it affects even those who did not participate in the transaction. When house prices rise, the rent increases along with the cost of housing for those who do not buy a house.

The biggest problem is household debt. Along with the soaring house prices, real estate loans have exploded. The current household debt in Korea is 1600 trillion won. This is almost equivalent to GDP, which is a serious level even when compared to OECD countries.

In the end, people who bought a house struggle to pay off their loans, and those who don’t buy a house struggle to pay for housing. Naturally, consumption will contract and the economy will inevitably stagnate.

“Basically, markets are driven by supply and demand. It is true that the Korean real estate market is overflowing with speculative demand, but there is also a lot of real demand. There will be limits to setting house prices in a situation where supply does not expand.”

“So, we plan to develop housing sites in Seoul and the metropolitan area, create the third new town, and supply more than 300,000 units.”

It was in the 1990s that the government began to build new towns in earnest. At that time, the Roh Tae-woo government decided to build 2 million houses to solve the problem of soaring house prices and supply shortages. To this end, the first new towns, represented by Bundang and Ilsan, were created and supplied with apartments, and thanks to this, the housing crisis in the metropolitan area was barely solved.

However, the population of the metropolitan area continued to increase after that, and the second new towns were built in Pangyo, Gwanggyo, Dongtan, Unjeong, and Wirye.

And this time, as house prices in Seoul skyrocketed again, I hurriedly pulled out the 3rd new city card. The plan is to build new towns in Wangsuk, Gyosan, Gyeyang, Changneung, and Jangjang to raise the price of a house in Seoul.

“Is it really necessary to build the third new city to get Seoul’s house price? The real estate market was buzzing again, thinking that all possible measures had already been taken.”

House prices in Seoul, which were feared to fall due to government measures, are rising again, and competition ratios of hundreds to one were recorded for each apartment sold.

“Once the third new towns are completed, overcrowding in the metropolitan area will get worse. And the next government will say that it will build a fourth new city.”

Prime Minister Ryu Jeong-hoon did not hide his discomfort.

“The government is doing the best it can. So, in your opinion, what would you like to do?”

If there is a better way than this, please tell me.

“Since the Big One, home prices in major cities across the United States have skyrocketed.”

Because San Francisco and Silicon Valley collapsed and the people who lived there moved in. Speculative demand was also pouring in, and it soared by tens of percent in less than a year.

Surprised state governments poured various measures, but it was not enough to keep up with the soaring house prices.

“But from the beginning of this year, the price suddenly started to drop sharply. You will know why.”

Because the rebuilding of San Francisco and Silicon Valley has begun. Hundreds of IT companies are still building their headquarters with the will to return to their hometowns. When companies go back, the people who work there also go back. Naturally, house prices are bound to fall.

“The bottom line is that it’s best to spread demand to other regions.”

“The government is well aware of that.”

“It’s not that I can’t because I don’t know.”

Prime Minister Ryu Jeong-hoon said with a sigh.

“The purpose of promoting the construction of Sejong City was to ease concentration in the metropolitan area. Government agencies in Seoul and Gwacheon relocated, and public officials who worked there naturally followed. Some civil servants moved with their families, but the reality is that many civil servants come alone to Sejong City to work on weekdays and go up to visit their families in Seoul on weekends.”

In fact, it is difficult to get tickets for the upbound bus to Seoul on Friday night and the downbound bus and KTX to Sejong on Sunday night.

This shows how difficult it is to disperse the population outside the metropolitan area.

“The concentration of population in the metropolitan area is a problem not only in the metropolitan area, but also in other areas. Not to mention the provinces, even in metropolitan cities such as Busan, Daegu, and Gwangju, the population is declining as young people migrate to the metropolitan area.”

Young people flock to the metropolitan area in search of jobs, and companies flock to the metropolitan area in search of job seekers. On the other hand, rural areas are experiencing industrialization and population decline at the same time. Even in Gunsan alone, an electric vehicle industrial complex entered the area and barely breathed a sigh of relief.(Read more @ wuxiax.com)

“Even past governments have made great efforts to solve this problem, but the 100 pills were invalid. No, it would be better to think that this was only achieved thanks to measures such as the construction of Sejong City and regulations on the metropolitan area.”

I nodded as if understanding.

“Then let me ask you one last question. According to the economic stimulus package announced, large-scale development plans are also included in Seoul and the metropolitan area, which will inevitably affect housing prices in Seoul. Isn’t it a contradiction to hold house prices while revitalizing the construction industry?”

“… … .”

This question was not easily answered by him.

I slowly brought the subject out.

“So, what would you do if there was a good way to stabilize Seoul housing prices and stimulate Gyeonggi-do?”

Prime Minister Ryu Jeong-hoon seemed surprised, but he asked calmly.

“Is there really such a way?”

“It is the Saemangeum new town development.”

Unexpectedly, the reaction came after a while.

“… … Is it Saemangeum?”

He is a prime minister from Honam, and his hometown is Gimje. As such, you must know more about Saemangeum than anyone else.

So I came here to meet you.

“Yes. If a new city is created in Saemangeum, the problem of population concentration in the metropolitan area will be solved and house prices in Seoul will naturally stabilize. Gyeonggi-do will improve with large-scale investment and construction. The government can catch two rabbits at once.”

I presented a document that briefly summarized the development plan.

“Would you like to read it?”

Prime Minister Ryu Jeong-hoon took out his glasses and put them on. Then, after carefully reading the last page, he asked me.

“How is this different from what the government is currently promoting?”

“It is almost the same. But there is one big difference.”

“What is it?”

I said firmly.

“The government shouldn’t do it, but I can do it.”

“… … .”