Long-term loans over 40 years also provided
Namyangju Wangsuk, Goyang Changneung, Hanam Gyosan
[Asia Economy Reporter Kim Min-young] The new government's first large-scale supply plan includes various measures to promote supply, such as ‘Youth Cost Price’ housing for the MZ generation (Millennials + Generation Z). This is because soaring house prices, interest rate hikes, and tightened loan regulations have created an environment where it is difficult for newlyweds and young people in their 20s and 30s to purchase their own homes. While the previous administration suppressed demand through regulations, the Yoon Seok-yeol administration’s real estate policy focuses on supplying housing quickly and smoothly by easing various regulations.
First, to restore the broken housing ladder, the government plans to supply public sale housing priced at 70% or less of market prices to youth (aged 19-39), newlyweds (within 7 years of marriage, etc.), and first-time homebuyers. The brands Youth Cost Price and First Home near Subway Stations will be integrated, and various types of housing such as urban one-room units, small-sized units, and medium-small units in new towns will be supplied depending on location and demand. Considering the financial capacity of young people, low-interest long-term loans of over 40 years will also be provided. However, to prevent speculative purchases for profit, a mandatory residence period of 5 years will be required, after which repurchase by the public sector will be possible. Additionally, upon repurchase, only 70% of the capital gains from the sale price will go to the original buyer, with the remaining 30% reverting to the public sector.
About 500,000 households will be supplied, focusing on locations such as areas near subway stations and industrial facility backlands, considering the demand side rather than simple supply volume. In particular, plans are being discussed to focus supply in the 3rd generation new towns with excellent locations such as Namyangju Wangsuk (15,000?20,000 households), Goyang Changneung (9,000?13,000 households), and Hanam Gyosan (8,000?10,000 households). The government plans to conduct preliminary subscription for 3,000 households within this year in Goyang Changneung, Bucheon Daejang, and Namyangju Wangsuk.
In addition, supply secured through donation-based contributions in subway station redevelopment projects and urban complex projects will also be concentrated. To this end, the government plans to amend the Urban and Residential Environment Improvement Act, which will provide incentives such as zoning upgrades or up to 120% of the legal maximum floor area ratio for donation-based contributions. The government plans to announce a ‘Comprehensive Youth Housing Support Plan’ in September, including detailed supply plans such as preliminary subscription schedules, subscription system reforms, and strengthened financial support measures.
A pilot project for ‘Home Ownership REIT Housing (tentative name)’ will also be introduced, allowing non-homeowners from low-income groups to live in rental housing for up to 10 years and then freely choose whether to purchase. This plan aims to allow early sales through tenant choice and improved business conditions for REIT operators, providing three opportunities for sale conversion at the 6th, 8th, and 10th years. The housing will be supplied by REITs funded by the Housing and Urban Fund, and the price will be set by prepaying half of the sale price as a deposit upon move-in, with the remaining half paid at the appraised value upon sale conversion. If the tenant chooses not to purchase, the rental period will be recognized as subscription enrollment period.
The government plans to expand the system after reviewing market responses following the pilot project. It is also considering a new model where REITs purchase all or part of the general sale units in redevelopment and reconstruction projects for supply. The government announced that it will proceed with amendments to the Special Act on Private Rental Housing and the land bidding process for the pilot project in the second half of this year.
Separately, the government is also promoting the introduction of a housing supply promotion area system. During the Moon Jae-in administration, regulations such as tax increases and loan restrictions were implemented to curb house prices, but these only worsened the transaction drought. Therefore, the government plans to establish a housing promotion area system, which will provide incentives such as comprehensive urban regulation easing for housing projects in designated promotion areas.
Once designated, various consent requirements will be relaxed, floor area ratios increased, and financial support provided within a certain period. This aims to induce supply quickly through rapid area designation in case of supply contraction due to economic downturns. However, considering possible side effects such as speculative demand inducement and concerns over preferential treatment, the government will decide on the introduction in the first quarter of next year after collecting opinions from local governments and experts.
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