Housing Policy Tentatively Agreed Upon... Noh Hyung-wook and Oh Se-hoon’s 'Uneasy Partnership'

Announcement of Specific Cooperation Plans Coordinating from Regulation to Supply
Aimed at Calming Market Instability
Subtle Differences Remain Between Both Sides Over Reconstruction Regulation Easing and New Housing Sites
Concerns Raised That "Roles of Public-Private Redevelopment Projects Remain Unclear"

[Image source=Yonhap News]

[Asia Economy Reporters Kim Hyemin and Moon Jewon] After a period of exploratory talks, Minister of Land, Infrastructure and Transport Noh Hyung-wook and Seoul Mayor Oh Se-hoon have tentatively joined hands. Under the broad premise of increasing supply without stimulating housing prices, they established a foundation for policy cooperation encompassing everything from anti-speculation measures to supply expansion. However, the perception of an uneasy partnership remains. While Mayor Oh has emphasized deregulation, Minister Noh has focused on eradicating speculation, revealing subtle differences in their positions despite apparent agreement.

◆ Joining Hands on Anti-Speculation and Supply Cooperation = According to industry sources on the 10th, the housing policy cooperation plan announced at the first official meeting between Minister Noh and Mayor Oh since their appointments was surprisingly concrete. Contrary to expectations that it would remain an abstract declaration, various areas saw alignment of positions. In terms of regulation, multifaceted measures focused on eradicating speculation were announced. A notable example is the acceptance of Mayor Oh’s proposal to advance the timing for restricting eligibility of redevelopment and reconstruction association members. They also set a joint goal to establish maintenance plans to prevent excessive privatization during development processes. It was clearly stated that areas or complexes with frequent ownership changes would be disadvantaged in redevelopment and reconstruction bidding processes.

The ongoing power struggle between public-led maintenance projects and private redevelopment and reconstruction was resolved by agreeing not to infringe on each other’s project domains. The government’s public-led maintenance projects and Seoul city’s private redevelopment project candidates will not overlap. Additionally, Minister Noh agreed to actively cooperate with Mayor Oh’s redevelopment revitalization plans, and Mayor Oh pledged to support the government’s housing supply measures to ensure their stable implementation. This shift away from competition between public and private maintenance projects appears to emphasize smooth progress of both projects to increase supply.

The emphasis on cooperation between the government and Seoul city seems to stem from a shared recognition that calming market anxiety is crucial. Despite successive policy announcements, housing prices continue to be stimulated not only in Gangnam redevelopment complexes but also in mid-priced complexes in northern Seoul. This measure is interpreted as an attempt by both institutions to stabilize current buying sentiment by jointly signaling supply cooperation. In fact, through this announcement, the Ministry of Land, Infrastructure and Transport and Seoul city presented a concrete figure of supplying an average of 107,000 housing units annually from 2021 to 2030. Minister Noh stated, "When purchasing a home, please consider the medium- to long-term housing market outlook after 2023," adding, "This is a time when more cautious judgment from market participants is required than ever before."

◆ Subtle Differences in Market Perceptions Remain = However, subtle differences in perspectives on the housing market were still detected on this day. Mayor Oh attributes the current unstable real estate market to a lack of housing supply, whereas Minister Noh places emphasis on speculation. Difficult points such as private reconstruction coordination were excluded from discussions altogether. Although it was agreed to hold further consultations on easing reconstruction safety inspections considering the housing market’s stabilization, Kim Susang, Director of the Housing and Land Office at the Ministry of Land, Infrastructure and Transport, later stated, "There was no consensus on the principle of easing; the discussion was only about holding additional consultations," maintaining a conservative stance.

There are also disagreements over new housing site candidates. While the Ministry and Seoul city agreed to actively cooperate on housing supply within newly announced sites such as Yongsan Camp Kim, they showed uncoordinated positions regarding controversial sites like the Nowon-gu Taereung Golf Course. Seoul city recently requested a review of housing supply within the Taereung Golf Course. However, the Ministry stated on this day, "Consultations with related agencies have progressed significantly, and we will begin formal approval procedures in the second half of the year," presenting a contrasting position.

Ko Jong-wan, President of the Korea Asset Management Research Institute, commented, "Meeting and collaborating, and the fact that the ruling and opposition parties cooperate on real estate issues, may have a psychological calming effect on the market," but added, "The roles of public-led and private-led projects remain unclear. It seems both sides lacked willingness to compromise."

Professor Shim Gyo-eon of Konkuk University’s Department of Real Estate said, "The meeting is positive, but it is questionable whether things will go well in the future," forecasting, "The Ministry of Land, Infrastructure and Transport may cooperate on reconstruction of small complexes in northern Seoul, but it will be difficult to cooperate on deregulation for large complexes like Eunma Apartment. Although they appear to be cooperating, fundamental measures to expand supply are unlikely to emerge."