On a recent Facebook post, Kim Yong-beom, the chief policy officer at the Blue House, expressed concerns regarding the current leverage structure underlying investment housing purchases. He pointed out that this system not only fosters speculation but also poses a risk of transferring macroeconomic crises through the dependency on financial leverage. Referring to past financial crises in Japan and the United States, Kim stated that the key issue lies not simply in housing prices but in the way leverage can amplify price volatility into systemic risks. He warned that while profits from property investments during price booms are privatized, the associated risks are socialized during downturns, creating an asymmetric financial burden on society.

Kim called for a reshaping of expectations regarding multi-property investments. He discussed potential regulatory adjustments such as gradually reducing loan-to-value (LTV) ratios for non-residential multi-property loans and implementing tiered loan maturity structures. Such changes would aim to recalibrate expectations of returns on multi-property investments and build trust in the gradual reduction of leverage for investment purposes. Kim emphasized that the transition is not merely about regulatory tweaks but necessitates a foundational shift in the direction set for investment leverage.

However, he acknowledged that leveraging by multi-property owners has played a significant role in the provision of rental housing. If investment leverage is to be reduced, discussions need to occur regarding what alternative structures can fill that gap. He suggested promoting institutional business operators that provide stable long-term rentals, expanding public and semi-public rental options, and developing a systematic supply of long-term fixed-rate financing aimed at housing, which could serve as viable alternatives to maintain rental supply stability amidst the proposed changes.