Hong Nam-ki: "Some Apartments in Seoul Are on the Verge of Decline... Expanding Private Redevelopment and Integrated Rental Supply" (Comprehensive)

Opening Remarks at the 34th Real Estate Market Inspection Meeting of Relevant Ministers

Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki is delivering opening remarks at the Meeting of Ministers in Charge of Real Estate Market Inspection held at the Government Seoul Office in Jongno-gu, Seoul on the 8th. Photo by Kim Hyun-min kimhyun81@

[Sejong=Asia Economy Reporter Kim Hyunjung] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, announced that within this month, a candidate site for private redevelopment under Seoul's Rapid Integrated Planning will be selected for about 26,000 households, and the second public redevelopment candidate site recruitment will begin. Additionally, about 70,000 integrated public rental housing units will be released annually. Based on this government supply policy, Deputy Prime Minister Hong assessed that the recent stabilization trend in the real estate market is solidifying, and some apartment sale prices in Seoul are on the verge of entering a decline.

On the morning of the 8th, Hong Nam-ki chaired the 34th Real Estate Market Inspection Meeting with related ministers at the Government Complex Seoul and stated in his opening remarks, "The government, Seoul City, and other local governments are closely cooperating to provide sufficient and rapid housing supply through complementary supply methods to broadly meet the demand for urban housing redevelopment."

He added, "To ensure no gaps in urban redevelopment projects, in December, we plan to consecutively select 25 candidate sites for the first Rapid Integrated Planning redevelopment, totaling about 26,000 households, and hold the second public redevelopment candidate site recruitment by the Ministry of Land and Seoul City. Areas not selected as Rapid Integrated Planning candidates will be allowed to participate in the public redevelopment recruitment if residents wish. We will also prepare measures to block market instability factors when announcing candidate sites and further strengthen collaboration and linkage between public redevelopment and Rapid Integrated Planning," he emphasized.

Public redevelopment operates by having the public sector participate mainly in areas where projects have stalled due to profitability issues, providing incentives such as increased floor area ratio and accelerated project speed. So far, 29 candidate sites with 34,000 households have been designated in the metropolitan area. Seoul's Rapid Integrated Planning private redevelopment supports procedural shortening in relatively profitable areas and is currently under review following the first candidate site recruitment in September and October.

Preparations for implementing integrated public rental housing will be accelerated. Deputy Prime Minister Hong said, "Integrated public rental housing is an important step toward realizing quality lifelong housing," and explained, "Starting in January next year, we will recruit the first tenants for 1,181 units in preferred locations such as Gwacheon Knowledge Information Town and Namyangju Byeollae, and subsequently supply about 70,000 units annually as integrated public rental housing."

Integrated public rental housing is a concept proposed in the Housing Welfare Roadmap (2017) to redesign the existing supply-centered public rental housing?such as permanent rental, national rental, and Happy Housing?that was operated in compartments, from the perspective of demanders. After preparatory research and other work, implementation preparations will be completed by the end of the year. Target groups include livelihood and medical benefit recipients, newlyweds, families with multiple children, university students, and youth.

Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki is delivering opening remarks at the meeting of ministers in charge of real estate market inspection held on the 8th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Kim Hyun-min kimhyun81@

Deputy Prime Minister Hong stated, "In connection with integrated public rental housing, medium-sized housing (exclusive area 60?85㎡) preferred by 3?4 person households will also be newly introduced and supplied at a quality level comparable to sale housing." He added, "In addition, in December, visible measures for housing supply will be implemented, including the largest pre-sale of 17,000 units of the year, designation of eight main districts under the 2.4 Plan, and the government will make every effort to firmly establish the recent housing market stabilization trend."

Deputy Prime Minister Hong evaluated that the government's housing supply measures, along with the base interest rate hikes and strengthened household debt management, have recently solidified the stabilization trend in the housing market. He said, "In the sales market, apartment prices in some areas of Seoul have stabilized to levels just before entering a decline, with half of November's actual transactions showing flat or declining prices compared to previous transactions. In provincial areas, price decline regions are increasing, including Sejong and Daegu." He continued, "Especially, the auction success rate (62.2%) in the apartment auction market, which indirectly reflects buying sentiment, is the lowest of the year, and the average number of bidders (2.8) has fallen to the lowest level since the 2000s. The jeonse (long-term lease) market is also showing the highest number of listings since the implementation of the lease law in August last year, due to increased move-in volumes and the end of large-scale redevelopment relocations, with the price increase trend continuing to slow," he elaborated.