This paper deals with two subjects related to government policies concerning
the real estate market. The first one is about the issue whether our real estate
market is stable enough to be left free without government intervention. Recent
two administrations have scrapped almost all mechanisms which are meant to
control speculative bubbles in real estate market. As a result, speculative
bubbles shocked some parts of national real estate market to a dangerous level
recently. This experience clearly demonstrates that it is too early to deregulate
the real estate market completely.
The second issue that is dealt with in this paper is the Comprehensive Real
Estate Tax. There was a great deal of controversy over the tax which was
introduced in 2005. A conservative administration which came to power in 2008
scaled down the tax drastically, which resulted in the reduction of its revenue to
almost half of the previous level. Recently, the argument that the tax on real
estate is more growth friendly compared to other kinds of taxes has gained much
support among economists. In this sense, strengthening the Comprehensive
Real Estate Tax rather than weakening it seems to be the right direction of
change. This paper argues that strengthening the tax is beneficial in terms of
both efficiency and equity.