"Minyeong Special Supply Already at 43%"... Must Consider 'Root Cause' Before Adding 'Conditions'

[Asia Economy Reporter Kim Yuri] Concerns are growing over the government's plan to expand the special supply ratio for newlyweds and first-time homebuyers. In a situation where supply itself is limited in key areas such as Gangnam in Seoul and downtown due to reconstruction regulations, the perception that "winning an apartment lottery" prevails due to direct and indirect price controls on sale prices. Amid criticism that 'limited benefits' are given only to a few, there are concerns that differentiating subscription eligibility not only by income and assets but also by age will inevitably lead to serious reverse discrimination controversies.

◆ "Private special supply is already 43%, it's a needle's eye" = Currently, private housing has a special supply ratio of 43% in total: 20% for newlyweds, 10% for multi-child families, 10% for institutions, and 3% for elderly parents support. For public housing, this ratio is as high as 80%, covering most of the supply: 20% for first-time buyers, 30% for newlyweds, 15% for institution recommendations, 10% for multi-child families, and 5% for elderly parents support.

The government is strongly considering a plan to sell all public housing through special supply and to increase the special supply ratio to more than half even for private housing. The controversy lies in the fact that such a plan reduces the share for middle-aged and older real demand groups who have been waiting for subscription wins under the point system to appease young real demand groups. Since these low-income real demand groups are divided into 2030 youth and 4050 middle-aged groups, criticism arises that this only fosters division among low-income real demand groups by age. Mr. Lee, a worker in his 40s, said, "The 100% point system was introduced by this government, and reducing this quota again betrays the trust of those who waited for the policy," adding, "Existing apartments have already risen as much as they can, so relying on subscription is the only way to purchase, which is frustrating."

Younger people also express dissatisfaction. They say that increasing the special supply ratio slightly does not change anything because the supply itself is limited. In fact, among 2,144 units in 11 apartment complexes sold in Seoul in the first half of this year, only 335 units were special supply. There is no special supply for apartments priced over 900 million won in speculative overheated zones such as Seoul. Ms. Yoo, a worker in her 30s, said, "The dual-income income criteria are unrealistic, so even if the standards are partially relaxed and supply to them is increased, I will not qualify anyway."

◆ Despite calls for supply expansion... limited supply in downtown Seoul and other areas = Supply is rather decreasing. According to Real Estate 114, the number of apartment units scheduled for move-in in Seoul next year is 25,021, about half of this year's 47,447 units. The metropolitan area is also expected to see a significant decrease with 136,336 units scheduled for move-in next year compared to 187,991 units this year. In Seoul, supply delays are becoming a reality due to the Housing and Urban Guarantee Corporation (HUG)'s price controls and the private land price ceiling system. Mr. Jung, a worker in his 40s, said, "With subscription points in the 50s, winning is already difficult, and if special supply increases, the chances for general non-homeowners to win will decrease further."

Experts say it is time to examine the fundamental causes before rushing to release patchwork additional measures. Yang Ji-young, head of Yang Ji-young R&C Research Institute, said, "The fundamental cause is that the supply problem is not resolved," adding, "It is necessary to expand incentives for street housing maintenance projects and, in the mid-to-long term, to ease regulations on maintenance projects."