"More Housing Supply Needed in Urban Areas"... Signals for Supply Expansion and Deregulation
Previous Government's Regulatory Tightening Caused Supply Disruptions and Market Overheating
Background of Visiting Aged Residential Areas... Goal is 'Rapid Supply in Urban Areas' with High Demand
Impact of Yoon Administration's Deregulation Policy... Easier Safety Inspections and Maintenance Zone Designations
President Yoon Suk-yeol visited an aging residential redevelopment site for the first time since his inauguration on the 21st and stated, "We will reconsider the redevelopment and reconstruction project procedures from the ground up to enable more housing supply in urban areas." Since the previous administration's tightening of redevelopment project reviews revealed limitations in housing supply, leading to overheating in the housing market, the plan is to simultaneously promote supply expansion and deregulation to stabilize the market. The president's signal to expand supply is expected to significantly help alleviate the supply shortage.
On the morning of the same day, President Yoon inspected the Moa Town site in Jungnang-gu, Jung-hwa 2-dong, Seoul, and discussed the direction of redevelopment and reconstruction of aging residential areas in the city with experts and residents.
The Moa Housing to be built in Moa Town is a project that renovates aging low-rise residential areas that do not meet redevelopment requirements on a small scale, where large-scale redevelopment is difficult. It is similar to Seoul's previous project called the 'Street Housing Redevelopment Project,' but the key is to significantly relax the land area criteria and gather low-rise multi-family houses and multi-household houses into a single complex to rebuild. Unlike the existing project method, the development period is also shortened by more than half, enabling housing supply in urban areas within a short period.
President Yoon's emphasis on the need to replace aging houses that have remained in the same condition for 30 years with comfortable and safe housing, during his first visit to an aging residential development site since his inauguration, is in the same context. During the presidential campaign, he visited reconstruction and remodeling project sites, and after taking office, he visited permanent rental housing and instructed measures to strengthen the protection of tenants' deposits. However, he judged that the basic supply framework alone has limitations for housing supply in urban areas.
In fact, the government has set a roadmap to supply 2.7 million households (based on permits and approvals) over five years. The new supply volume is concentrated in the metropolitan area according to the demand. A total of 1.58 million households will be supplied in the metropolitan area, including 500,000 households in Seoul. Compared to 2018?2022, the supply will increase by 180,000 households in Seoul and 290,000 households in the metropolitan area.
The waiting demand in the metropolitan area is focusing on 520,000 households to be supplied through the activation of redevelopment projects in urban centers such as Seoul. The Ministry of Land, Infrastructure and Transport has eased the reconstruction burden charges (a system that recovers part of the housing price increase due to reconstruction) and lowered safety inspection standards to activate reconstruction, so it is expected that smooth supply different from the previous administration will be achieved. On this day, President Yoon also met with residents to exchange opinions on the necessity of small-scale redevelopment projects, residents' hardships due to excessive redevelopment and reconstruction regulations and project delays, and the need to expand urban housing supply.
Market reactions to the two pillars of 'supply expansion' and 'deregulation' are also appearing rapidly. The number of safety inspections passed, which was only 65 cases in the past five years, has already reached 163 cases this year alone, and the designation of redevelopment zones, which averaged only 28,000 households annually, has more than doubled to 62,000 households this year.
The Blue House expects that the side effects caused by supply shortages, which the market is concerned about, will be preemptively blocked by President Yoon's on-site visit and the directive to 'reconsider from the ground up' the redevelopment project procedures. As of August this year, nationwide housing construction starts have decreased by more than half compared to the same period last year, and permits and approvals have decreased by nearly 40%, raising concerns about a supply cliff in the next two to three years. Considering that housing supply (move-in) usually occurs two to three years after construction starts and three to five years after permits and approvals, a supply shortage may occur in the next two to three years.
Park Sang-woo, the nominee for the new Minister of Land, Infrastructure and Transport, also repeatedly promised to ease redevelopment regulations along with accelerating the supply of the 3rd New Town. Park, nominated as minister from the Ministry of Land, Infrastructure and Transport for the first time in 10 years, recently told reporters, "The real estate market is, in my judgment, going significantly downward, so I will basically take a stance of deregulation and approach the market." Park is a figure who led deregulation policies such as lifting the speculative overheated district designation in the three Gangnam districts of Seoul and temporarily exempting the reconstruction excess profit charge when he served as director of the Housing and Land Office at the Ministry of Land, Infrastructure and Transport.
Meanwhile, before visiting Moa Town on the same day, President Yoon visited a multi-family house in Jungnang-gu to check on a single elderly resident and inspected cold wave protection measures for vulnerable groups. It was four days after he instructed on the 17th to "strengthen safety and care for vulnerable groups such as elderly living alone in preparation for the cold wave," and he expressed the government's commitment to welfare for the vulnerable while encouraging the efforts of the accompanying life support workers.
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