[Seoul, Now]What It Takes for a Breakthrough in Seoul's Housing Supply

Decentralize Authority Concentrated in the Seoul Mayor
and Fundamentally Reform Laws and Procedures

The supply shortage in Seoul's real estate market is not a phenomenon that emerged overnight. Its roots go back to the tenure of the late former Seoul Mayor Park Won-soon in 2011. He declared a policy stance to curb redevelopment and reconstruction, calling the New Town Project "a bad policy that brought citizens to tears." Since then, the structure of housing supply in Seoul has become entangled.

The "New Town Exit Strategy" announced by former Mayor Park in January 2012 was a large-scale policy that lifted designations on 393 out of 683 redevelopment areas at the time. According to a 2019 study commissioned by the Seoul Metropolitan Council and conducted by the Korea Housing Association, titled "A Study on the Limitations and Improvement Measures of Seoul's Redevelopment Exit Strategy," this resulted in nearly 250,000 apartment units that could not break ground.

At the time, the Seoul city government concentrated its administrative resources on urban regeneration projects. Efforts focused on low-rise residential areas such as Seongbuk, Eunpyeong, Gwanak, and Jongno, including mural projects, alleyway revitalization, and the expansion of living social overhead capital (SOC). However, these initiatives were far removed from the actual supply of new housing. Rather than serving as an alternative to redevelopment, urban regeneration was later criticized for merely delaying the deterioration of existing residential areas. The suppression of supply did not stop at the lifting of redevelopment zones. The city also tightened safety inspection standards for reconstruction, expanded historical and cultural preservation districts, and made various permitting procedures more stringent, such as imposing floor height restrictions.

In 2013, former Mayor Park established the "Seoul Skyline Management Principles," introducing a regulation limiting building heights to 35 stories, citing the need to protect the cityscape from disorderly high-rise development and to preserve views and sunlight rights along the Han River. The "35-story rule" ultimately blocked reconstruction projects in Gangnam and along the Han River.

About four to five years later, the impact of the supply contraction began to surface. In 2018, the city proposed an integrated development plan for Yeouido and Yongsan, but this was when the real estate market was entering a rapid growth phase. The city missed its window of opportunity, and as it tried to start belatedly, the government, fearing a chain reaction of soaring home prices, opposed the plan, leading to its abandonment before it even began.

Leadership that failed to anticipate the future ultimately intersected with other factors to create instability in the real estate market. Over the past decade, apartment prices in Seoul have risen two to three times, sometimes even more. Those without homes face skyrocketing prices, while single-home owners or those without prime properties experience a sense of relative deprivation, and residents in other regions feel left out, leading to resentment toward the government and the ruling party.

This is not to say that former Mayor Park failed and current Mayor Oh Se-hoon is succeeding. Because so much authority is concentrated in the mayor's office, the level of risk related to real estate issues depends on who is elected and what philosophy they hold. When it comes to the current housing supply issues in Seoul, the mayor holds the real power, such as permitting authority. That is why the mayor can challenge the central government and propose separate supply measures.

After the government announced its September 7 real estate supply measures, home prices continued to rise, almost mocking the policy, because the underlying supply issues were exposed. The government's incompetence and distorted perception of the real estate market, combined with a structure in which the Seoul mayor holds the key to supply, cannot resolve the complicated reality. Authority should be decentralized to district heads who are familiar with on-the-ground conditions, in order to accelerate housing supply and seek ideas for land procurement and housing provision.

We must move away from the "centralization of policy" focused on the government and the Seoul mayor, and instead strengthen field responsiveness and flexibility. As long as we remain trapped within self-imposed legal and institutional limitations-such as floor area ratio restrictions and school sunlight rights-there can be no breakthrough supply measures. Laws and procedures that hinder smooth supply must also be revised together.