New economic team means little without policy change

The most notable feature of Sunday’s economic team reshuffle was replacing two officials chiefly responsible for real estate policy. Finance Minister Koo Yun-cheol, who oversaw taxation, and Land Minister Kim Yoon-duk, responsible for housing supply, are both leaving.

Given that the administration’s declining approval ratings and loss of public support stem substantially from its housing policy failures, their departures clearly amount to dismissals. But changing personnel will not fix policy or restore public trust. The failures arose from the policy direction itself.

Faced with housing market instability since last year, the government relied almost exclusively on regulation. It imposed unprecedented lending restrictions and effectively placed nearly the entire Seoul metropolitan area under land transaction permit requirements. The result was worsening jeonse (lump-sum deposit) and monthly rental shortages and soaring prices for affordable homes.

Instead of easing the burden on ordinary households and genuine homebuyers, the government pushed punitive tax revisions treating multiple-home owners — as well as single-home owners who do not occupy the residence — as speculators. Even ruling Democratic Party figures objected, forcing the government to retreat by saying the proposal was not final and further undermining its credibility.

Housing supply policy, meanwhile, has barely moved for a year. Despite promising supply at all costs, the government avoided measures to promote reconstruction and redevelopment, the practical engines of new housing, while focusing on public rental homes on vacant land. Even that effort stalled following difficulties persuading residents and coordinating with local governments.

Stabilizing housing requires acknowledging these mistakes and changing course. The tax proposal needs comprehensive reconsideration, not minor revisions, alongside measures that genuinely expand supply.

But bold change looks uncertain. The nominees to lead the Ministry of Finance and Economy and Ministry of Land, Infrastructure and Transport are incumbent vice ministers. And Kim Yong-beom, the presidential chief of staff for policy and the administration’s de facto economic policy chief, remains in place.

Financial authorities also escaped the reshuffle, even though their policies contributed to turmoil involving single-stock leveraged exchange-traded funds, or ETFs; labor policy remains tilted toward unions as the youth employment rate falls; and budget officials continue highlighting cash assistance despite concerns about spending.

Without a comprehensive reassessment of economic policy, personnel changes alone risk bringing greater policy failures and deeper public disillusionment.