| Deputy Prime Minister and Finance Minister Hong Nam-ki, second from right, speaks during a ministerial-level meeting at the Seoul Government Complex in Gwanghwamun, Wednesday. Courtesy of Ministry of Economy and Finance |
Korea to pick ‘New Town' finalists for housing supply
By Lee Kyung-min
The government will announce the candidates for areas where 250,000 new public housing units will be built as soon as possible, in a swift move to dispel concerns over the efficacy of the large housing supply plan. The list will be announced as early as March or June at the latest.
Deputy Prime Minister and Finance Minister Hong Nam-ki said Wednesday that related revision bills will be submitted to the National Assembly this week for enforcement in June following National Assembly approval before April.
Builders will be able to seek in-depth, extensive consultation with the government over the next three months to initiate state-led redevelopment and reconstruction plans in June, he added.
“The government is aware of market expectations and concerns about how and whether the Feb. 4 measures will be implemented,” Hong said during a ministerial-level meeting at the Seoul Government Complex in Gwanghwamun. “The key is to quickly specify follow-up measures, thereby helping assure parties involved about the government's resolve to deliver the policy.”
According to the government plan announced Feb. 4, 836,000 homes will be built nationwide by 2025 through state-run redevelopment and reconstruction, as part of continued efforts to stabilize housing prices that have nearly doubled over the past few years.
Some 616,000 homes will be built in Seoul, and the surrounding Gyeonggi Province and nearby Incheon will get 320,000.
The supply-bolstering measure was a major change from the two dozen previous “botched” real estate policies, defined by demand control including a heavier tax on owners of multiple homes and tighter lending rules for mortgage seekers among other measures to curb property speculation.
The course correction was largely well-received but concerns continued since key details were left unclear including where the homes would be built and how to resolve compensation and profit-sharing issues with landowners.
Hong said over 2 million homes will be supplied by 2025, the largest supply volume in this century so far.
“With a total 1.27 million homes to be supplied in Seoul and the surrounding Gyeonggi area in line with a number of supply measures thus far combined with over 830,000 houses announced earlier this month, the number will top 2 million.”
Myongji University real estate professor Kwon Dae-jung said the government's effort toward signaling consistency is a step in the right direction in the long term, but will have little impact in the immediate future.
“Even if the period of the project is reduced, it will take about five years for the construction to be completed. Of over 830,000 homes to be supplied, only about 100,000 would be made available over the short term, which is also not a given. The measures will have little effect on significantly curbing the surge of housing and jeonse prices.” Unique to Korea, jeonse is a home rental system whereby tenants pay a lump sum refundable deposit instead of monthly rent.
Seoul National University economist Lee In-ho echoed the view, saying housing arrangements for many will not see an immediate improvement.
“It will take years for the measures to have a tangible outcome. The worsening housing situation for many in the meantime will not take a turn for the better, since many details are left uncertain. Housing prices are unlikely to drop.”