Only the Ministry of Land Knows '50,000 Houses'... Housing Supply Measures Already 'Creaking'

Among the Additional Supply of Over 130,000 Households, 50,000 Units Are Public Reconstruction
Estimation Criteria 'Rough Guess'... Seoul City and Ministry of Economy and Finance Also Unaware
Feasibility in Question... Urgent Policy Announcements Face Issues Everywhere

Minister of Land, Infrastructure and Transport Kim Hyun-mi is smiling during a briefing on the results of the Task Force meeting on expanding housing supply held at the Government Seoul Office Building on the 4th. (Photo by Yonhap News)

[Asia Economy Reporters Yuri Kim and Mune Won] The 8.4 housing supply plan is faltering less than a day after its announcement. In particular, among the total planned supply of 132,000 households, the public participation high-density reconstruction (hereinafter referred to as public reconstruction), which accounts for 50,000 households, was found to have no clear basis for calculation known to other ministries or local governments such as the Ministry of Economy and Finance and Seoul City, except for the Ministry of Land, Infrastructure and Transport.

Public reconstruction is a redevelopment method led jointly by public institutions such as Korea Land and Housing Corporation (LH) and Seoul Housing and Communities Corporation (SH). It relaxes the floor area ratio to 300-500%, allowing the supply of more than twice the number of existing households, and recovers 50-70% of the increased floor area ratio as a donation.

According to the government on the 5th, the 50,000 households of public reconstruction supply announced in the supply plan the previous day were arithmetically calculated as 20% of the approximately 260,000 households in 93 sites in Seoul that have been designated as redevelopment zones but have not received project implementation approval. There was no procedure to assess the feasibility of the policy for the reconstruction sites during this process.

The government explained, "This method will only be applied to reconstruction complexes that willingly agree," and "Since it is not a situation where it can be forced, only 20% of the volume was allocated." In other words, the number of supplied households varies greatly depending on residents' consent, making the figure of 50,000 households essentially a rough estimate.

A government official said, "I did not participate in the calculation process of the 50,000 households and received the calculation data from the Ministry of Land, Infrastructure and Transport." He added, "Honestly, it is difficult to consider the estimate that 50,000 high-density reconstruction households are possible as logical since it was a simple guess."

Earlier, Seoul City also stated in a separate briefing on the 8.4 supply plan that it does not have a separate estimate for the 50,000 households, which is a figure set by the government. Regarding the government's estimation method, Seoul City said, "The government ran simulations, and Seoul City does not know about it." When asked if there are any associations that have expressed willingness to participate in public reconstruction, the answer was simply "No."

According to Asia Economy's investigation, Seoul City consistently argued in the TF working meetings that the supply bottleneck should be eased by normalizing the artificially suppressed private reconstruction procedures rather than high-density reconstruction, but this was not accepted due to the government's position that loosening private reconstruction regulations could stimulate housing prices.

Although the city later tried to smooth things over by saying "there is no disagreement with the government," considering the TF discussion process and announcement content, there remains a possibility that the city, which holds the authority for permits in the individual reconstruction project process, could block the government plan. An official from the redevelopment industry said, "It is problematic to estimate supply volume based on unfounded expectations, but it is also questionable whether a project method with disagreements among policy decision-makers can proceed swiftly."