[Seoul NOW] Housing Supply Between Promises and Reality

This Housing Supply Plan Sets 'Groundbreaking' as the Standard, Not 'Occupancy'
Ambiguous Criteria Have Long Been Used by Government and Politicians
Clear Metrics Are Needed for Rational Decision-Making

Minjin Kim, Head of the Local Government Team, Social Affairs Department

The issue of housing supply in Seoul is a perennial topic during periods of soaring home prices and a recurring theme during election seasons. Home prices continue to rise, and the perception of a "supply shortage" has become entrenched. The government's or candidates' promises to "expand supply," often focused on numerical targets, bring both hope and anxiety to the public.

When citizens hear promises to supply "tens of thousands, or even hundreds of thousands of housing units," they immediately envision new apartment complexes being built. In reality, however, most of these numbers include units that are only at the administrative procedure stage, with the land not even broken ground yet, but are still counted as official "supply volume." Stages such as "designation of maintenance zones" or "finalization of project plans" are often treated as symbols of tangible supply, even though these do not represent units that are actually ready for occupancy.

Even during periods of rapid home price increases, the government's policy tools remain similar. Whenever skyrocketing housing prices lead to social unrest, the government announces large-scale supply measures. These government plans, much like election pledges, emphasize specific numbers and rosy forecasts. However, the actual process of implementing these policies is different. In particular, redevelopment and reconstruction projects, which account for the majority of Seoul's housing supply, require well over ten years to complete, from safety inspections, designation of maintenance zones, approval of promotion committees and associations, selection of construction companies, approval of project implementation, management and disposal, to groundbreaking and completion.

In fact, although the Seoul Metropolitan Government has shortened the period for designating redevelopment and reconstruction zones by about three years through measures such as the Fast-Track Integrated Planning, it still takes a significant amount of time before tangible results (actual occupancy) are seen. Therefore, the immediate impact of the "numbers" announced during periods of rising home prices is far removed from what is felt in the short term. The supply plans presented by the government and political circles to stabilize home prices or win votes in the short term are often disconnected from reality. Both election season supply pledges and government supply measures during periods of surging prices may appear to be effective policies on the surface, but in most cases, they do not deliver immediate supply effects in the actual housing market.

This phenomenon becomes even more pronounced when supply numbers are transformed into "political language." Although specific numbers are presented, the promises often remain hollow. Supply targets, expressed as concrete figures, influence public sentiment. They may temporarily boost policy credibility and stabilize an anxious market. However, as political rhetoric becomes more excessive, the foundation of policy trust weakens, and the housing market oscillates between hope and anxiety, leading to greater price volatility.

For policy effects to be truly realized, it is essential to clearly distinguish between feasibility, timelines, and supply that can be tangibly felt. It is also crucial to separate explanations of units available for occupancy from those still at the administrative procedure stage. At a minimum, explicit promises based on "groundbreaking," "pre-sale," or "occupancy" criteria must be specified to ensure the credibility of measures or pledges.

Furthermore, a proper policy should differentiate between short-term tangible supply and long-term planned supply, presenting concrete timelines such as "50,000 units available for occupancy within three years, 100,000 units for pre-sale within five years, and 200,000 units with project initiation within ten years." This marks a turning point from political language to administrative transparency.

In this respect, the recent September 7 real estate policy, which stated, "We will break ground on 270,000 housing units annually in the Seoul metropolitan area for five years," is at least more concrete and conscientious, as it uses "groundbreaking" as the supply criterion. Without clearly defined supply criteria, it is impossible to evaluate the process or verify the results.

If, as in the recent case of the Seoul Metropolitan Government, supply numbers are presented (such as supplying 240,000 units over five years through redevelopment and reconstruction), but the original promise was based on "zone designation criteria," this ultimately amounts to giving citizens false hope. Believing that 240,000 new units would actually be available for occupancy in Seoul over five years would also be naive. Eliminating such illusions is essential for rational decision-making.