Daegu City, Complete Suspension of New Housing Approvals... 50,000 Units Expected This Year

Existing Supply Also Converted to Post-Sale and Rental

[Asia Economy Yeongnam Reporting Headquarters Reporter Koo Dae-seon] On the 30th, Daegu City announced that due to the continuous increase in unsold housing units in the region, the number of unsold units reached 13,445 as of the end of last year, and the number of units scheduled for occupancy this year is also predicted to be around 36,000. Accordingly, the city will mobilize all possible policy measures to stabilize the local housing market and has decided to fully suspend the approval of new housing construction project plans until market stabilization is achieved.

So far, Daegu City has made efforts to regulate supply by strengthening the approval review of housing construction projects, including tightening building review standards related to sunlight rights, limiting residential floor area ratios in mixed-use commercial residential areas, and maintaining a policy of suppressing large-scale new housing site supply in suburban areas. Since June 2021, the city has repeatedly requested the Ministry of Land, Infrastructure and Transport to lift the designation of adjustment areas preemptively, achieving the result that with the start of the 8th local government term, the entire Daegu area including Suseong-gu was removed from the adjustment area designation.

Daegu City Hall Dongin Office Building.

Additionally, the qualification for applying for housing subscription, which was previously restricted to residents who had lived in Daegu for more than six months, was abolished in December 2022. Through multiple meetings with housing construction businesses, the city has encouraged self-help measures such as order management suited to current housing market conditions, adjusting sales timing, and considering post-sale construction to find solutions to the unsold housing problem.

Furthermore, in consultation with the Housing and Urban Guarantee Corporation (HUG), Jung-gu, Dong-gu, Nam-gu, Dalseo-gu, and Suseong-gu have been designated as unsold housing management areas. From land acquisition to sales approval, new supply volumes are being regulated through prior review by the Housing Guarantee Corporation. The city has also requested the designation of Seo-gu and Buk-gu, which meet the criteria, to HUG in November 2022.

In addition, the city has proposed strengthening financial, tax, and policy support to central government agencies to revitalize housing transactions. This led to the inclusion of policies such as easing acquisition tax surcharges for multi-homeowners, extending the exclusion of capital gains tax surcharges, allowing rental registration for small apartments, and easing short-term capital gains tax rates on pre-sale rights in the 2023 Economic Policy Direction (December 21, 2022) and the Ministry of Land, Infrastructure and Transport’s 1st and 3rd real estate measures.

Going forward, Daegu City plans to continuously propose various policies to the central government, including the transfer of housing policy authority, easing of DSR (Debt Service Ratio), reinstatement of grace periods for loan repayments, and easing or abolishing comprehensive real estate tax assessment standards.

In particular, alongside the previously implemented strengthening of building reviews, the city will suspend approvals for newly submitted housing construction projects, adjust sales timing for already approved projects, and demand that project owners induce post-sale construction or convert units to rental housing, employing a desperate strategy.

Hong Jun-pyo, Mayor of Daegu City, stated, “Although it is difficult to resolve the unsold housing situation in a short period, we are continuously devising measures to resolve unsold units and stabilize the housing market, exploring all possible means and methods within Daegu City to ensure a soft landing of the housing market.” He strongly urged, “Since most real estate policy authority lies with the central government, the government-level policy support measures must be promptly prepared and implemented.”