Speeding Up the February 4 Supply Measures... Numerous Preceding Tasks Remain, 'Mountain After Mountain'

Next Month's Amendments to the Urban and Residential Environment Improvement Act and the Special Act on Public Housing
Minister Byeon Chang-heum: "Accelerating with a New Public-Led Fast-Track Model"
Concerns Over Delays in the 3rd New Town Fast-Track and Public Housing Plans for Shantytowns

[Asia Economy Reporter Jo Gang-wook] The government's unprecedentedly large-scale '2·4 Supply Plan,' introduced as a drastic measure to curb soaring housing prices, is already encountering difficulties from the start. Although the government has expressed its intention to proceed swiftly through a fast-track process, only the broad outline of supplying 830,000 households nationwide and 320,000 households in Seoul has been revealed, while detailed matters such as the designation of new housing sites remain vague, increasing market uncertainty. Additionally, preconditions such as compensation for the 3rd New Towns and the redevelopment project of the Seoul Station shantytown are also facing challenges. How to resolve the strong resistance to 'public' involvement from many reconstruction associations and promotion complexes is also a key issue.

Amendments to the Urban and Residential Environment Improvement Act and the Special Act on Public Housing Next Month... Advancing the Timing of New Public Housing Site Designations

According to government departments and the real estate industry on the 13th, the government is accelerating follow-up measures such as legislative procedures related to the real estate policy announced to supply 830,000 households nationwide, including 320,000 households in Seoul by 2025. Amendments to the Urban and Residential Environment Improvement Act (Urban Improvement Act) and the Special Act on Public Housing (Public Housing Act) will be made next month, and the timing for designating new public housing sites will be advanced.

In addition, LH and SH will conduct focused briefing sessions over the next three months, and the government plans to advance the designation of new public housing sites as much as possible. Furthermore, a collaborative system involving local governments, LH, SH, and other related organizations will be established and operated.

Along with this, on the 10th, Land, Infrastructure and Transport Minister Byeon Chang-heum requested cooperation from Seoul district mayors regarding the recently announced '2·4 Supply Plan.' At the briefing session on the 'Public-led 3080+ Housing Supply Expansion Plan' held that day, Minister Byeon emphasized, "The government's determination to stabilize the housing market is firm, and we will proceed with this plan swiftly with a serious commitment as a promise to the people. Since this plan differs from existing supply methods, active participation and organic cooperation from landowners, developers, public institutions, and local governments are crucial. Therefore, Seoul City and each district should mobilize all their capabilities for additional discovery of project candidate sites, support for permits, and resident publicity."

In particular, the Ministry of Land, Infrastructure and Transport requested that districts actively discover priority project candidate sites at the district level and propose them within this month to expedite project promotion. Candidate sites proposed by districts will be actively reviewed by including them in the existing candidate sites under consideration, and once the law amendments are completed, follow-up procedures such as designation of planned districts will be promptly pursued.

After the Lunar New Year holiday, through the expanded and reorganized Integrated Support Center for Redevelopment Projects, residents and landowners will be able to apply for project candidate sites and receive consulting, with active guidance at the district level. The Ministry plans to expand the LH Integrated Support Center to the Seoul regional headquarters and additionally establish centers in regional headquarters such as Gyeonggi Province. This will operate as a dedicated organization for future project application reception and preliminary simulations.

Despite these policies, market concerns surrounding the real estate measures have not subsided. Above all, detailed information on when, where, and how much supply will be provided has not been disclosed. The government stated that the supply of 830,000 households nationwide is based on land acquisition standards by 2025. However, the market points out that if construction can start immediately, supply can be expected within 3 to 4 years for apartments, but if land acquisition is delayed by 3 to 4 years, actual supply may only be possible 7 to 8 years later.

Compensation Issues for the 3rd New Towns and Redevelopment of Seoul Station Shantytown Must Also Be Resolved First

Preconditions such as compensation issues for the 3rd New Towns and the redevelopment project of the Seoul Station shantytown remain.

Korea Land and Housing Corporation (LH) began compensation negotiations for the Hanam Gyosan and Incheon Gyeyang New Towns in December last year and is currently proceeding. As of early this month, the progress rate of compensation for target land is about 43% for Hanam Gyosan District and 35% for Incheon Gyeyang District. For the remaining districts such as Namyangju Wangsuk, Gwacheon Gwacheon, Goyang Changneung, and Bucheon Daejang, land compensation will be implemented sequentially starting from March this year. The government stated that to reduce trial and error experienced in the 2nd New Towns regarding land acquisition, it will apply a fast-track approach by concurrently establishing district plans and land compensation to shorten the compensation period.

However, on the 3rd, a day before the announcement of the real estate supply plan, landowners of 62 public housing districts nationwide, including the 3rd New Towns, staged a collective protest. This is due to concerns that if the introduction of public self-owned housing within the 3rd New Towns is formalized based on the government announcement, the issue of 'low compensation' due to forced land expropriation could worsen.

The Public Housing District Nationwide Solidarity Council (Gongjeonhyeop) held a press conference in front of the LH Hanam Business Headquarters in Pungsan-dong, Hanam-si, Gyeonggi Province, demanding △ the halt of the hasty promotion of the 3rd New Town 'fast-track,' △ opposition to the supply of 'public self-owned housing' in the 3rd New Towns, △ abolition of prior appraisal and implementation of fair compensation, △ fair promotion of land-for-land compensation, and △ expansion of capital gains tax reductions. Afterwards, Gongjeonhyeop visited the LH headquarters in Jinju, Gyeongnam, to discuss excluding the introduction of public self-owned housing in the 3rd New Towns and demands for fair compensation.

In addition, opposition from land and building owners in the area regarding the redevelopment plan for the Dongja-dong shantytown near Seoul Station is intensifying.

Earlier, on the 5th, the Ministry of Land, Infrastructure and Transport announced plans to promote about 47,000㎡ of the Dongja-dong shantytown area in Yongsan-gu as a public housing district project, aiming to build a total of 2,410 housing units, including 1,450 public housing units and 960 private sale units.

However, the Huam Special Planning District 1 (Dongja) Preparatory Promotion Committee issued a press release on the 9th strongly opposing the plan, stating, "The government abruptly announced the plan without any prior consent or consultation with land and building owners," and "We strongly oppose the government's plan."

The committee also criticized the government's compensation plan, saying, "It is an act of depriving private property rights under the pretext of public interest," and "The concept of compensation mentioned by the Ministry of Land, Infrastructure and Transport is interpreted as the government cash-settling the designated land at the official land price and depriving land and building owners of their private property rights."

In response, on the 9th, the Ministry of Land, Infrastructure and Transport issued a press release attempting to soothe concerns by stating that fair compensation will be provided to building and landowners based on appraisal prices considering current market prices. Additionally, separate from compensation, residents within the project district who are building and landowners will be granted priority supply rights for public sale housing or private sale housing (excluding the cost of basic living facility installation from the sale price).

For building and landowners residing outside the project district, if they are homeless, special supply rights for public sale housing will be granted. However, actual compensation will proceed after completing district designation this year, conducting a basic compensation survey to collect information on buildings, land, ownership status, and resident demands, and establishing a detailed compensation plan. Accordingly, the final compensation plan is expected to be confirmed and announced after the district plan reflecting residents' opinions is approved (scheduled for 2022) and finalized (scheduled for 2023).

A real estate industry official pointed out, "Not only the compensation issue for the 3rd New Towns but also the shantytown redevelopment project is already stumbling from the first step, raising doubts about whether the schedule can proceed as planned," adding, "The lack of transparency regarding the redevelopment target areas, quantities, and timelines is causing confusion, and there is even growing skepticism that the project momentum may not be maintained if the administration changes."