Presiding over the 10th Real Estate Market Inspection Meeting of Relevant Ministers
Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is delivering opening remarks at the "10th Real Estate Market Inspection Meeting of Related Ministers" held on the 19th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Kang Jin-hyung aymsdream@
[Sejong=Asia Economy Reporters Kim Hyun-jung and Jang Se-hee] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, announced on the 19th, "We will supply 114,000 rental housing units nationwide, 70,000 units in the metropolitan area, and 35,000 units in Seoul over the next two years."
On the same day, Deputy Prime Minister Hong held the "10th Real Estate Market Inspection Meeting of Related Ministers" at the Government Seoul Office and said, "The government has focused on expanding the supply of rental housing by increasing the total housing stock, excluding demand management-type jeonse (long-term deposit lease) measures such as converting jeonse demand to sales and liquidity supply as much as possible."
The government plans to make every effort to secure ultra-short-term supply volumes by the first half of 2021 to resolve the supply shortage in the jeonse market. Deputy Prime Minister Hong emphasized, "We will promptly construct and secure 49,000 new rental housing units nationwide and 24,000 units in the metropolitan area, preferably through net increase methods. For the 19,000 units nationwide and 11,000 units in the metropolitan area already planned for 2021, we will shorten the move-in period from the second half to the first half and from the second quarter to the first quarter, and also disperse relocation demand caused by redevelopment projects." He added, "We will also strengthen residential stability support for tenants by lowering the guarantee fee rate to support registered rental business operators in fulfilling their obligation to subscribe to rental deposit guarantees."
Additionally, the government plans to expand the target residents of public rental housing to some middle-income groups and increase its quality and scale. Deputy Prime Minister Hong said, "We will extend the maximum residence period for public rental tenants to 30 years so they can live with peace of mind for a long time, and expand the eligibility for public rental housing to some middle-income groups by raising the median income standard from 130% to 150%." He further explained, "We will also newly introduce high-quality medium-sized housing (exclusive area 60-85㎡) for 3-4 person households and supply 63,000 units over the next five years."
He also revealed mid- to long-term plans to strengthen public rental housing management. He explained, "We will improve public rental housing into high-quality and convenient homes by innovating material quality and defect management, and support social mix and living SOC so that public rental housing can function as a place for communication and exchange within local communities."
The government expects that the supply shortage over the next two years will be resolved through the announced jeonse market supply and demand management measures. Deputy Prime Minister Hong said, "With this measure, the supply volume nationwide (based on completion) in 2021 and 2022 will be at levels similar to previous years," adding, "The previously feared supply shortage over the next two years is expected to be resolved." Regarding the somewhat delayed preparation and announcement of the measures compared to market expectations, he explained, "Considering the special relationship between the sales market and the jeonse market, sufficient prior review of the effectiveness of the measures was necessary," and "All jeonse measures over the past 10 years were re-examined from scratch before announcing this."
He also hinted at additional regulations by mentioning the rising housing sales prices in some non-regulated areas of the metropolitan area and local metropolitan cities. Deputy Prime Minister Hong emphasized, "While the apartment sales prices in Seoul have maintained a firm trend since the fourth week of August, with a wait-and-see stance continuing, prices have recently risen mainly in some non-regulated areas of the metropolitan area and local metropolitan cities," and added, "We are closely monitoring these areas."
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