[8.16 Supply Measures] Won Hee-ryong "Excess Profits from Reconstruction Should Naturally Be Reclaimed"

Ministry of Land, Infrastructure and Transport Minister Q&A
"However, supply must not be blocked... Adjust to an appropriate level"
"2.7 million homes excessive? ... Reduced during previous decline, causing a surge"

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@

Won Hee-ryong, Minister of Land, Infrastructure and Transport, stated regarding the scope of the reorganization of the Reconstruction Excess Profit Recovery System, "Excess profits must naturally be recovered," but added, "The recovery system should not become a barrier that hinders the promotion of redevelopment projects and must be adjusted to a reasonable level." In response to concerns from some quarters that the supply of 2.7 million housing units might be excessive, he said, "In the past, reducing housing supply during a downturn led to a surge in prices."

Below is a summary of the key Q&A with Minister Won on June 16 regarding housing supply.

-- Reorganization of the Reconstruction Excess Profit Recovery System (재초환). To what extent can the burden be eased?

▶ The position is that excess profits must naturally be recovered. However, the level must be appropriate. It is problematic if the current 재초환 system acts as a factor blocking supply in urban areas. Since the reorganization of 재초환 requires the consent of the National Assembly, thorough consultation is essential. It is difficult to specify the exact scope. We will adjust it to a reasonable level that does not hinder supply.

- What is the specific roadmap for supplying 2.7 million housing units?

▶ For cases like 'Youth Housing' and 'First Home Near Subway Stations,' which are supplied at 70% of market price, there seems to be much interest in the criteria and opportunities. We will start pre-subscription within this year and present a detailed follow-up schedule.

Regarding new towns, public land, designation of redevelopment zones, and urban complex projects, there is also significant interest in locations. Some parts have already been decided, but legislative matters and additional consultations with local governments and completion of implementation plans are needed. Today, we are presenting the broad principles and housing plans, and specific locations and sales schedules will be announced gradually as they are finalized.

-- With housing prices declining, isn't supplying 2.7 million units too much?

▶ The 2.7 million units represent the government's supply capacity, not a forced flood of supply. The figure is based on permits and approvals, and there is a time lag before occupancy. Also, this supply plan includes many redevelopment projects, so housing demolition must be considered. The 2.7 million units over five years is a figure calculated by the Ministry of Land and private experts considering these factors.

However, in the past, reducing supply during a housing price decline led to an unprecedented surge during the subsequent rise. We must not repeat this failure. We will steadily proceed with supplying 2.7 million units to meet demand.

-- How will the 1st, 2nd, and 3rd generation new towns be approached?

▶ First, the 1st generation new towns are over 30 years old. Since they are large-scale and densely built in the same period, a systematic approach rather than individual redevelopment projects is necessary. We will prepare a special law and master plan in the National Assembly to proceed systematically at the level of urban recreation.

The 2nd generation new towns will focus on securing transportation networks. Although residents have moved in, transportation infrastructure is lacking, causing great hardship. We will conduct a comprehensive survey of the transportation situation and implement drastic measures. The 3rd generation new towns will learn from these points and ensure transportation measures are fully prepared in line with occupancy.

-- Due to heavy rain in the central region, there were cases of damage to vulnerable housing, but even large apartments built by top-tier construction companies experienced flooding. This could lead to disputes between residents and construction companies, but practically, residents have little leverage against large construction firms.

▶ I do not have detailed information on this matter, so it is difficult to respond immediately. However, the Ministry of Land is responsible not only for underground and semi-underground housing but also for all abnormal dwellings and disaster-vulnerable buildings nationwide. We will work closely with other ministries to prepare a comprehensive disaster-vulnerable housing countermeasure that considers this issue as well.