[The Editors' Verdict] Housing Supply: Skillful Management Is Needed, Whether It’s a Black Cat or a White Cat

"Remodeling is also a good maintenance project to supply new homes. So why is the government so fixated only on reconstruction?"

This is a question from a resident living in an apartment complex that recently decided to proceed with remodeling. Similar questions are raised among the 153 associations nationwide currently promoting remodeling projects.

Remodeling is a method of extensively renovating or partially rebuilding buildings that are over 15 years old to prevent aging or restore functionality. It is usually pursued in complexes where reconstruction is difficult due to a floor area ratio of over 200%. Unlike reconstruction, remodeling does not demolish existing homes to build as many new units as possible. Instead, it adds new structures onto the existing framework. As a result, the number of newly built homes is fewer than in reconstruction. New housing supply is limited to about 15% of the existing number of households. However, remodeling requires less time and cost than building a new structure. Recently, as rising construction costs have caused reconstruction projects to lose profitability and be canceled one after another, remodeling has emerged as an alternative to reconstruction. Recently, remodeling projects have been accelerating not only in Seoul’s Gangnam area but also in places like Yongsan and Mokdong.

This atmosphere differs from the government’s approach, which seeks answers only in reconstruction whether housing prices rise or the economy slows. A month ago, the government’s August 8th measures to curb housing price increases focused on reconstruction-centered housing supply plans. They promised to speed up projects by reducing procedures and increase the height of reconstructed apartments to improve profitability. This is similar to the January 10th measures announced earlier. At that time, amid a real estate market downturn and rumors of a construction crisis in April, the government’s response was to ease reconstruction regulations. Key points included adjusting the mandatory timing for passing reconstruction safety inspections and public support for reconstruction in first-generation new towns.

Reconstruction is the most viable housing supply method in Seoul, where there is no land to build new homes. However, reconstruction is not the only solution. Remodeling can play a role comparable to reconstruction. According to the “2030 Seoul Metropolitan Apartment Remodeling Basic Plan” announced by Seoul City last October, out of 4,217 apartment complexes in the city, only 878 are eligible for reconstruction. Meanwhile, 898 complexes are eligible for household-increasing remodeling (expansion), and 2,198 complexes are eligible for customized remodeling (non-expansion).

In particular, according to this plan, among the 116 residential living zones in Seoul, 107 have apartment complexes eligible for household-increasing remodeling. Assuming these projects proceed smoothly and about 15% additional housing is supplied, it is estimated that up to 116,164 new homes could be supplied by 2030. This number is not significantly different from the 130,000 homes the government aims to start building early by 2029 through the enactment of a special law (Reconstruction and Redevelopment Promotion Act) even under a divided National Assembly. Notably, this basic plan indicates that even if new housing increases to the maximum through remodeling, there is no need to expand facilities such as water and sewage systems, schools, or parks.

The estimated new housing supply figure in the basic plan is ideal, considering that about 145 complexes are currently pursuing remodeling in the metropolitan area. However, it raises the question of whether concerns about housing supply and demand would have been further alleviated if the government had supported remodeling as much as reconstruction. If remodeling contributes to curbing soaring apartment prices, whether it is a black cat or a white cat, shouldn’t the government demonstrate skillful management?