HIRI Proposes Introduction of Special Housing Supply Zones: "Private Sector Supply Remains Sluggish"

Panoramic View of Apartment Complexes in Seoul City

There has been a call to introduce a special housing supply zone system to promote housing supply in the private sector.

The Housing Industry Research Institute (HIRI) proposed on the 12th that "due to complicated administrative procedures, the implementation of project financing (PF) soundness measures, and overlapping regulations aimed at stabilizing housing prices, housing supply in the private sector remains sluggish." The institute suggested the introduction of a special housing supply zone system.

According to HIRI, under this system, the Minister of Land, Infrastructure and Transport would be able to designate 'special housing supply zones' after considering the degree of housing shortage and the extent of housing price increases, following deliberation by the Housing Policy Review Committee and consultation with related ministers. These special zones would be operated for the minimum necessary area and the shortest possible period, with regular reports on their operation submitted to the National Assembly.

In addition, within these designated zones, the authority to approve housing construction projects above a certain scale, including urban redevelopment projects, would be centralized under the Minister of Land, Infrastructure and Transport. Currently, the minister holds approval authority for public housing construction projects on public land and for private land development projects with a site area of 3.3 million square meters or more. Koo Jeongeun, Associate Research Fellow at HIRI, explained, "Because it takes a long time to supply housing, the aim is to accelerate the supply process in urgent cases."

HIRI also suggested that the 'Integrated Review Committee' established within the Ministry of Land, Infrastructure and Transport should review licensing matters related to housing supply and coordinate with relevant agencies.

Furthermore, HIRI recommended granting benefits for housing projects within special zones, such as exceptions to floor area ratio and various impact assessments, granting land expropriation rights if certain conditions such as land acquisition rates are met, and easing PF loan conditions and provisioning ratios. The institute also proposed granting exceptions for loans to end-users without homes, such as interim and balance payments, and strengthening public funding and guarantee support.

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