It Could End with Just Securing the Site
The Key Is... Private Sector Participation and Actual Supply Speed
On the morning of the 4th, at the auditorium of the Government Seoul Office Annex in Jongno-gu, Seoul, Minister of Land, Infrastructure and Transport Byeon Chang-heum is answering questions during the briefing on the "Public-led 3080+ Drastic Expansion Plan for Housing Supply in Metropolitan Areas." Photo by Joint Press Corps
[Asia Economy Reporter Jang Sehee] The government announced that it will supply 320,000 housing units in Seoul and 830,000 units nationwide by 2025 through easing regulations related to reconstruction. However, since the supply volume is based on 'land acquisition,' it is expected to take more time until actual supply.
On the 7th, according to the Ministry of Land, Infrastructure and Transport and the Ministry of Economy and Finance, the government announced the 'Public-led 3080 Plus Metropolitan Area Housing Supply Expansion Plan' containing these details. However, the numbers do not reflect any prior demand, so it is uncertain whether they will lead to actual supply. A government official explained, "The 320,000 units in Seoul and 830,000 units nationwide are based on land acquisition, not actual supply," adding, "Conducting a demand survey before announcing the supply plan could affect the market."
Ultimately, the 836,000 units proposed by the government do not incorporate demand surveys. The volume the government can supply on its own is only 263,000 units classified as new housing sites. The remaining 573,000 units are calculated by taking the scope of projects that can be targeted and applying an expected participation rate. Depending on the demand for reconstruction and redevelopment, the supply volume may decrease or the pace may be delayed.
The government expects this measure to prevent 'panic buying.' Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, previously evaluated, "By supplying a total of 830,000 housing units centered on the metropolitan area and five major metropolitan cities by 2025, it will lead to a firm stabilization of the housing market at the level of a 'supply shock.'"
Byun Chang-heum, Minister of Land, Infrastructure and Transport, also commented on the timing of housing occupancy in Seoul, saying, "While preparing this, we arranged various small-scale development projects," adding, "So some can be occupied within one year, some within 2-3 years, and the longer ones within five years." He further stated, "This will help overcome the problem where people buy houses excessively thinking 'the houses available now are the cheapest' due to anxiety that affordable housing will no longer be supplied in Seoul."
Experts agree that since reconstruction and redevelopment involve sharply conflicting interests, it remains to be seen whether the measures will lead to actual supply. Professor Kwon Dae-jung of Myongji University’s Department of Real Estate said, "In reconstruction and redevelopment, persuading the opposition is important," and added, "It could end up being just planning during the remaining one and a half years of the term."
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