Jeong Won-ju, Chairman of the Korea Housing Association, "Serious Unsold Housing Issue... Requesting Government Intervention"

Jung Won-ju, President of the Korea Housing Construction Association, is speaking at a press briefing held at a restaurant in Yeouido, Seoul, on the 31st.
[Photo by Ryu Tae-min]

[Asia Economy Reporter Ryu Tae-min] Jeong Won-ju, president of the Korea Housing Construction Association (KHCA), stated, “The construction industry is deteriorating due to issues such as unsold housing. The government needs to take a more proactive approach to revive the construction market,” urging further deregulation. However, it is uncertain whether these requests will be accepted, as the government expressed a negative stance on purchasing unsold houses the day before.

At a KHCA press conference held in Yeouido on the 31st, the association announced “Requests from the housing industry following the announcement of the 1·3 real estate deregulation measures.” The main points include ▲ improving financing conditions for housing developers through better real estate project financing (PF) loan guarantees ▲ providing liquidity support to housing developers holding unsold houses ▲ supporting normalization of housing transactions ▲ creating flexible conditions for housing supply.

Earlier, on the 3rd, the government announced real estate deregulation measures, lifting restrictions in most regulated areas except for the three Gangnam districts in Seoul and Yongsan-gu.

In particular, KHCA also requested a “repurchase condition purchase” system, where public institutions such as the Housing and Urban Guarantee Corporation (HUG) would purchase unsold houses under construction at the current public purchase price level and repurchase them from the project entity after completion.

As a measure to support the normalization of housing transactions, the association proposed easing the Debt Service Ratio (DSR). They suggested excluding or relaxing the DSR application for buyers acquiring existing houses being sold by prospective residents or unsold houses after completion, and providing tax reduction benefits to those acquiring unsold houses to resolve the issue of non-occupancy after completion.

Additionally, they called for support for the supply of private rental housing by relaxing tenant recruitment requirements when converting land designated for sale housing to rental housing, as well as requesting government support such as shortening permit periods and ensuring smooth supply of construction labor and materials.

Regarding this, President Jeong said, “Construction companies are not trying to make excessive profits,” adding, “Companies that did not secure funds during the construction boom will find it difficult to endure when tough times come.”

However, there are critical voices regarding the government’s purchase of unsold houses requested by the association, citing that taxpayers’ money would be used to support construction companies. Minister of Land, Infrastructure and Transport Won Hee-ryong also said at a meeting with reporters the day before, “At this point, it is inappropriate for LH to have purchased unsold houses at that price,” and criticized, “It guarantees profits for construction companies with taxpayers’ money and encourages moral hazard.”