The night of March 9 marked the closet election in modern South Korean history as exit polls had predicted, defying expectations that it was a clear win for now President-elect Yoon Suk-yeol.

But when results of ballot counting in the richest areas in southeastern Seoul -- Gangnam, Seocho and Songpa -- started to come in, the balance began to tip in favor of Yoon. In Gangnam and Secoho, he carried over 67 and 65 percent of the vote, respectively. In the end, Seoul turned red, which is the color of Yoon’s People Power Party, as Yoon beat rival Lee Jae-myung by nearly 5 percent.

The win in Seoul was seen as a clear sign of rejection of the current administration’s housing policy that has failed to control home prices. Over 1 in 5 voters picked “stability in the housing market” as the most important issue for the next administration to address, according to an exit poll by KBS, MBC and SBS.

Speaking to the press on March 21, Rep. Ko Young-in of the Democratic Party of Korea said failure to control housing prices had influenced the outcome.

“Those in their 30s among which the party had a lead used all their capital to buy a property. Yet (our) efforts to lower housing prices have placed a burden on them. And for those who have yet to buy a property became hopeless and desperate as housing prices went up,” he said.

“Whether you have bought a home or not, a lot of supporters in their 30s who are most sensitive about this issue left our party which we accepted with a heavy heart.”

To many analysts, Yoon’s win in the rich neighborhoods did not come as a surprise. After all, the main conservative People Power Party has often had the backing of affluent communities. During the 2021 by-election, conservative Seoul mayoral candidate Oh Se-hoon won in the three aforementioned neighborhoods with a big margin. During the 18th presidential election in 2012, ex-President Park Geun-hye, a conservative candidate, won five districts in Seoul including Seocho, Gangnam and Yongsan while incumbent President Moon Jae-in won in the rest of the capital.

But many of those who do not own a home also voted for Yoon.

“Rich people in Gangnam and those with multiple homes were hit by heavy taxation (under the Moon administration) so their votes can be easily explained away in terms of tax,” said Park Hap-soo, an adjunct professor at the Graduate School of Real Estate Studies at Konkuk University.

“But those who do not own a home also cast the backlash vote because housing prices went up as a result of a failed housing policy.”

Mixed with other economic issues such as job shortages, voters turned their back on the incumbent Democratic Party of Korea, he explained.

At first glance, it seems puzzling that those living in semibasement apartments seen in the film “Parasite” and homeowners in the rich Gangnam area famed for the 2012 song “Gangnam Style” voted for the same candidate who called for low taxes and easing regulations.

But the current administration’s failed attempts to stabilize the housing market through what is known as the “three tenants’ laws” -- introduced by the Democratic Party in 2020 intended to improve tenants’ rights -- ended up uniting people across the class divide against the government, said professor Jang Hee-Soon at the Department of Real Estate at Kangwon National University.

“The current government’s housing policy caused the market to move in a direction opposite to their intention, adding to the anxiety around housing instability even among people who live in the apartments seen in ‘Parasite,’” Jang said.

Who voted for Yoon?

Rich homeowners in Seoul who are against property tax and tough housing regulations voted for Yoon. But some of those without homes threw support behind Yoon by casting what has been seen as a “backlash vote” against the Moon administration over its failure to control housing prices.

In the joint exit poll by KBS, MBC, and SBS, Lee led Yoon by 8.5 percent among nonhomeowners.

Between those who own one property, Yoon was leading by 3.7 percent. Among those who own multiple properties, Yoon also led Lee by over 5 percent.

According to an analysis of government data by the Maeil Business Newspaper, however, six out of 10 districts in Seoul with the highest percentage of renters went to Yoon.

Support for Lee among those over 60s who don’t own a home was higher than other age groups, indicating older people’s interest in housing welfare, the media outlet reported.


Yoon’s housing policy

Yoon has promised to increase housing supply -- a total of 2.5 million homes over the next five years, of which 1.5 million will be in Seoul and surrounding areas.

He has also promised to ease regulations on redevelopment projects as part of efforts to ramp up housing supply.

Yoon has also pledged to do away with or reduce the comprehensive real estate tax -- which is currently levied on apartments whose value exceeds 1.1 billion won ($897,000) or individuals who own multiple homes that are worth in total over 600 million.

He is also expected to raise the loan-to-value ratio, up to 80 percent for first-time homebuyers, according to his campaign promise.

On Friday, the president elect said a “closer look” is necessary at excessive regulations aimed at multiple-home owners, signaling a departure from the current administration that has rolled out more than 20 sets of real estate regulations.

Experts are holding out hope that Yoon’s housing policy is headed in the right direction.

“The Yoon administration has pushed for easing regulations and increasing supply. An increase in supply in the market will soothe the anxiety among buyers who feel they have to purchase a home now,” said professor Jang.

“This will send signals and ease the pressure (on the market), preventing housing prices from rising.” 

Will the working class benefit?

Not everyone agrees that increasing supply alone can stabilize the housing market.

During an interview with YouTube channel 3PR TV in January, Sim Sang-jung, a veteran politician who ran as the presidential candidate for the Justice Party, called for an increase in public housing supply and to target working class renters.

“During the Moon Jae-in administration, housing supply hit a record high in Seoul and surrounding areas -- nearly 200,000 homes,” she said.

“But when you compare 2018 and 2020, the percentage of households living in a home they own dropped 0.1 percent.”

Professor Park said an increase in housing supply could see housing prices rise at first, acknowledging concerns over the adverse impact of redevelopment projects on the market.

“In Banpo, redevelopment projects took place quickly, prompting prices of new apartments to go up. We saw the Gangnam area lead the upward trend in housing price. “People anticipate that their apartments will be chosen as the next site for a redevelopment project.”

Though the initial rise in housing prices is inevitable, it could lead to a more stable market in the long term, the expert said.

“In the long run, housing prices could be stabilized following an increase in supply after the initial rise in prices,” he said.