[Exclusive] Democratic Party Considers Supplying Installment Apartments at 'Half of Half Price' in 3rd Phase New Town

Future Housing Promotion Team Focuses on Preventing Middle-Class Rental Housing & 'Lotto Sales'

[Image source=Yonhap News]

[Asia Economy Reporter Park Cheol-eung] The Democratic Party of Korea is considering the supply of equity accumulation-type housing, a kind of installment payment method where residents pay only a portion of the sale price initially and live long-term, starting from the 3rd generation new towns. This is part of an effort to provide homeownership opportunities to those with insufficient financial resources and to prevent so-called 'lottery sales' aimed at speculative gains. Additionally, the party plans to expand rental housing accessible to the middle class and accelerate public redevelopment and reconstruction projects in aging urban areas.

On the 25th, Cheon Jun-ho, vice head of the Democratic Party's Future Housing Promotion Team, said in a phone interview with Asia Economy, "We are focusing on creating pathways for young people with limited payment ability to own homes and are reviewing equity accumulation-type methods," adding, "This can be realized through various channels such as the 3rd generation new towns, public redevelopment and reconstruction in urban areas, and supply through idle land."

The 3rd generation new towns include Namyangju Wangsuk, Hanam Gyosan, Incheon Gyeyang, Goyang Changneung, Bucheon Daejang, Gwacheon, and Ansan Jangsang, totaling approximately 194,000 households. Pre-subscription is scheduled to begin in the second half of next year.

Cheon said, "The existing supply plans for the 3rd generation new towns can be changed," emphasizing, "The basic goal of the promotion team is to supply high-quality lifelong housing and to help those who find asset formation difficult to achieve housing stability." The promotion team is expected to announce a comprehensive plan next month.

The equity accumulation-type housing is partially being promoted by the government and Seoul City, where residents initially purchase about 20% equity and live long-term for over 20 years while making sequential payments. For example, if the sale price is 500 million KRW, residents can move in by paying about 100 million KRW initially. Short-term resale for speculative gains is not allowed. This method is actively discussed as a way to prevent the side effect of public housing prices following surrounding market prices even when supplied at relatively affordable rates. In this regard, the Future Housing Promotion Team is exploring methods using real estate investment trusts (REITs) or cooperative models.

Among the measures announced by the government on the 19th, rental housing for the middle class will also be continuously expanded, including in the 3rd generation new towns. The income eligibility criteria for tenants will be relaxed, and the housing area will be expanded from 60㎡ to 85㎡. This is regarded as a paradigm shift in existing rental housing policies.

Urban regeneration projects will also be a main pillar of future housing supply. The government is already accepting public redevelopment project proposals through the Korea Land and Housing Corporation (LH), with about 70 applications nationwide. Legislation to expedite and invigorate regeneration projects is also imminent.

The National Assembly Land, Infrastructure and Transport Committee decided to merge and review four amendment bills to the 'Special Act on Activation and Support of Urban Regeneration' proposed by Democratic Party lawmakers and promote them as a committee bill (alternative). The amendments include provisions to accelerate project speed and establish legal grounds for training urban regeneration specialists. Minor changes to urban regeneration plans will omit the opinion hearing process, and the establishment of shared property management plans will be exempted, among other contents.

At the launch ceremony of the Future Housing Promotion Team earlier this month, Democratic Party leader Lee Nak-yeon mentioned, "By fostering specialized urban regeneration companies, we can streamline urban planning proposals, repair of aging housing, integration of related urban projects, and utilization of public corporations."

Cheon said, "Urban regeneration, along with housing supply close to workplaces, also has a balanced development effect," adding, "In the past, the full demolition and redevelopment approach had issues such as failure to properly obtain residents' consent or displacement of residents, but public redevelopment is designed to prevent such side effects by ensuring transparency, speed, and business feasibility."