[8.16 Supply Measures] 2.7 Million Housing Units Supply Bomb Over 5 Years... Full Mobilization of Deregulation and Incentives

Yoon Seok-yeol Government's First Real Estate Supply Plan
Expansion of Urban Supply Including Reconstruction Excess Profit Recovery System Reform
Discovery of 150,000 New Housing Sites and 1st Generation New Town Master Plan
Acceleration of Maintenance Projects by Consolidating Overlapping Procedures and Reviews
Pre-Subscription Within the Year for Youth Cost at 70% Market Price and First Homes Near Stations

Minister of Land, Infrastructure and Transport Won Hee-ryong announced the Yoon Seok-yeol administration's first housing supply plan on the 16th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Kim Hyun-min kimhyun81@

Over the next five years, a 'supply bomb' of 2.7 million housing units will be dropped nationwide. To address the severe shortage of housing supply in urban areas compared to demand, various regulations will be eased, including the rationalization of the redevelopment excess profit recovery system and lowering the threshold for redevelopment safety inspections. Additionally, the designation of new maintenance zones within urban areas will be expanded, new housing sites will be discovered, and various incentives to shorten the maintenance project period will be fully mobilized.

On the 16th, the Ministry of Land, Infrastructure and Transport (MOLIT) announced the 'National Housing Stability Realization Plan' jointly with related ministries. This first supply measure of the Yoon Seok-yeol administration is basically designed as a structure where the private sector supplies and the public sector supports. The public sector will focus on roles that complement market functions, such as housing welfare for vulnerable groups, while easing various regulations that have been pointed out as obstacles to housing supply and leading private-sector-driven supply.

The plan focuses first on urban supply. MOLIT stated, "For housing market stability and improvement of residential environments, sufficient high-quality housing must be supplied in preferred urban areas. However, private maintenance projects, which are key to urban supply, have been greatly reduced due to excessive regulations."

Despite several supply measures proposed by the previous government, housing prices surged because supply did not match the preferences of demanders. Minister Won Hee-ryong of MOLIT said, "The previous government's housing supply was, in short, a supplier-centered policy that ignored the opinions of demanders. The goal of this policy is to steadily and sufficiently supply housing of the quality and location where demanders want to live."

Accordingly, MOLIT plans to normalize private maintenance projects such as redevelopment and reconstruction to facilitate the supply of new housing in urban areas and to introduce and activate new urban development models that utilize private sector creativity.

Minister of Land, Infrastructure and Transport Won Hee-ryong is entering the briefing room at the Government Seoul Office in Jongno-gu, Seoul, on the 16th to announce the Yoon Seok-yeol administration's first housing supply plan. Photo by Kim Hyun-min kimhyun81@

Easing regulations on reconstruction and redevelopment is the first step for urban supply. Reconstruction projects have been considered a major means of supplying quality rental housing and affordable sale housing in land-scarce urban areas. However, the reconstruction excess profit recovery system, re-implemented in 2018, has hindered supply. Originally introduced targeting some high-priced houses in Seoul, due to the surge in housing prices, cases of imposing the recovery charge have appeared not only in Seoul but also in provincial areas.

Accordingly, MOLIT plans to rationalize the current imposition criteria and prepare measures to consider long-term homeowners and elderly persons with one house. Also, projects contributing to public interest, such as supplying rental housing, will be eligible for charge reductions. The safety inspection system, another key factor blocking new reconstruction, will also see eased regulations. The weight of structural safety will be lowered from the current 50% level to 30-40% to lower the project threshold.

The government will also support speeding up supply by reducing the time required for maintenance projects, including full introduction of integrated reviews for private maintenance projects. Considering that overlapping and delays in administrative procedures hinder smooth supply, similar procedures will be integrated and operations rationalized. Small-scale reconstruction, which can only be promoted in a single apartment complex, will be allowed in adjacent multiple complexes to increase development density, along with financial and tax support and procedural simplification for small-scale maintenance.

The designation of new maintenance zones in Seoul will also increase, aiming to supply 220,000 units nationwide and 100,000 units in Seoul over five years. Additionally, 150,000 new housing sites will be discovered and announced sequentially from October after consultations with local governments. The first-generation new towns will start reorganization master plan work within the year, the second-generation new towns will present wide-area transportation network measures, and the third-generation new towns will complete transportation measures sequentially in time for the first move-in in 2026.

Along with this, pre-subscription for youth cost-price housing and first homes near stations for the housing-vulnerable and youth will begin within the year. A total of 500,000 units will be supplied at about 70% of market price. Measures to reduce noise between floors and improve the quality of public rental housing have also been prepared. If floor thickness is reinforced, costs can be recognized by adding them to the sale price, and public rental housing size will be expanded from about 15 pyeong to about 17 pyeong.

Minister of Land, Infrastructure and Transport Won Hee-ryong is announcing the Yoon Seok-yeol administration's first housing supply plan on the 16th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Kim Hyun-min kimhyun81@

In addition, attention is focused on the additional lifting of regulation areas. On the same day, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho said, "Considering the changed market environment, we plan to more rapidly promote real estate normalization tasks, including additional lifting of regulation areas in regions with stable conditions." The government lifted the designation of speculative overheating districts for six cities, counties, and districts in Daegu, Daejeon, and Gyeongnam in June, and also lifted the designation of adjustment target areas for 11 cities, counties, and districts including all of Daegu except Suseong-gu, Gyeongsangbuk-do Gyeongsan, and Jeollanam-do Yeosu. Following Deputy Prime Minister Choo's announcement of 'additional lifting of regulation areas,' it is expected that additional lifting of speculative overheating districts and adjustment target areas will be announced soon.

Deputy Prime Minister Choo described this policy as a 'bold paradigm shift in housing policy.' He emphasized, "The policy focus has shifted from simple quantity securing centered on suppliers to providing quality living environments centered on demanders," and "We will promote comprehensive residential space innovation aimed at improving people's livelihoods, housing stability, and the quality of life for low-income and middle-class citizens." Minister Won said, "This housing stability realization plan aims to supply housing in places preferred by demanders," and added, "We will announce detailed plans through consultations with the National Assembly, local governments, and residents' opinion gathering."