Unexpected Choices Amid Reconstruction Market Expectations in Gangnam, Yeouido, Mokdong
Rapid Implementation Possible for Garohouse and Moahouse but Limited Supply Scale
Careful Approach Evaluated Amid Rising House Prices and Seoul Mayor's Authority Limits
[Asia Economy Reporter Onyu Lim] Seoul Mayor Oh Se-hoon chose a "mini reconstruction" project site, known as a street housing maintenance project, as his first field visit related to housing supply. This unexpected choice comes amid heightened expectations for large-scale reconstruction markets in Gangnam, Yeouido, and Mok-dong following Mayor Oh's election. Before his election, Mayor Oh emphasized "rapid" housing supply, but now he is showing a "cautious" stance in the face of rising housing prices and the limitations of the Seoul mayor's authority.
According to Seoul City on the 13th, Mayor Oh visited Raum Foret Apartment in Seongnae-dong, Gangdong-gu, Seoul, in the afternoon. This complex was transformed from 54 old houses into a 71-unit apartment building with one basement floor and seven above-ground floors through the street housing maintenance project. It was completed at the end of November last year. This is Mayor Oh's first field visit related to housing supply since his inauguration six days ago. A Seoul city official explained, "We plan to explore ways to expand housing through small-scale maintenance projects and actively review policy improvements."
Mayor Oh, who was elected amid public sentiment punishing the ruling party over real estate issues, had a key pledge to supply 185,000 housing units through the normalization of private reconstruction and redevelopment. During his candidacy, he visited reconstruction-challenged sites such as the Yeouido pilot apartment in Yeongdeungpo-gu and the new town apartments in Mok-dong, Yangcheon-gu, emphasizing the urgency of development. Therefore, it is considered surprising that he chose a small-scale reconstruction site as the first symbolic field for real estate policy promotion.
This site is related not to reconstruction or redevelopment but to another housing supply pledge by Mayor Oh called Moa Housing. Previously, Mayor Oh promised to supply 30,000 units through Moa Housing, which grants floor area ratio incentives if a certain scale is met, allowing small landowners to jointly develop their properties. Small-scale reconstructions like street housing or Moa Housing have the advantage of simplified procedures compared to large-scale reconstruction, enabling faster project promotion. However, they have disadvantages such as limited supply scale and inability to improve surrounding infrastructure including roads, creating a gap from the housing desired by ordinary citizens.
Ultimately, analyses suggest that Mayor Oh, who emphasized rapid housing supply, is repeatedly deliberating in the face of practical barriers. The biggest barrier is the concern over a sharp rise in housing prices. If Seoul housing prices, which have just stabilized, fluctuate again due to reconstruction activation, there could be a backlash from public sentiment in next year's local elections. Already, just Mayor Oh's election has raised asking prices in major reconstruction complexes by 200 to 300 million KRW. On the 5th, a 245㎡ (exclusive area) unit in Hyundai 7th Complex, Apgujeong-dong, Gangnam-gu, was traded at 8 billion KRW, 1.3 billion KRW higher than six months ago at 6.7 billion KRW. Moreover, except for the abolition of the 35-floor height restriction, there are virtually no regulatory relaxations possible solely by the Seoul mayor's authority without cooperation from the Seoul City Council, which is dominated by the ruling party. In other words, Mayor Oh's "speedy housing supply" inevitably requires speed adjustment.
Mayor Oh's concerns were also evident in his remarks on the first day of receiving a work report. At the session where he received the first work report from the Housing and Architecture Headquarters the day before, Mayor Oh requested, "Please report on ways to supply housing cautiously and swiftly so that a signal for housing supply can be sent." At the same time, he ordered, "Please prepare separate preventive measures for areas where there are concerns about real estate price increases, such as major reconstruction complexes and redevelopment along the Han River."
Having returned to the helm of Seoul City in a spectacular fashion after 10 years by advocating massive deregulation for the private sector, Mayor Oh now faces the challenge of finding a solution that simultaneously satisfies the two propositions of "rapid" and "cautious" housing supply.
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