New method should help cool overheated market
The government has selected eight areas in Seoul for a pilot redevelopment project by public builders to supply high-quality housing around subway stations. If the project proceeds as planned, it will supply 4,763 homes, an increase of 3,059 added to the existing 1,704 in the city. The number may not be so large as to exert significant influence on the housing market, however, it is meaningful as the project will likely meet the most cherished wishes of families needing homes.
Once an area is selected for the public redevelopment project, it can enjoy various benefits, such as eased restrictions on floor area ratios, exemption from the sales price ceiling and simplified permit processing. The central and local governments have decided to retrieve part of development profits and designate them as land transaction permit areas to curb property speculation. If everything goes well, the project is expected to expand the housing supply and ensure optimal profits for builders and existing property owners while dampening speculation and providing public rental housing.
The Moon Jae-in administration's housing policy, which has focused on regulation to suppress price rises, has failed to attain its goal, only causing side effects. The fundamental solution lies in expanding the housing supply according to market principles, by incentivizing the private sector while curbing speculation and redeeming development profits to a proper extent. The new plan will not be without problems, however. At stake is how to harmonize different interests of major parties involved ― landlords, tenants and storeowners. No less challenging will be how to persuade the opposition political parties to cooperate in enacting related laws and regulations to lay the legal and institutional groundwork for the new type of public redevelopment.
Urban redevelopment by public contractors suits the policy direction of new Land, Infrastructure and Transport Minister Byeon Chang-heum, an advocate of increasing public housing supply in urban areas. However, neither supply expansion nor price stability should be all about housing policy. The ultimate solution is providing homes with sizes and forms desired by customers, at places where they want, and at prices they can afford to pay. On the occasion of the public sector-led redevelopment project, the government needs to fine-tune its policy to expand the housing supply through urban redevelopment.
The government has selected eight areas in Seoul for a pilot redevelopment project by public builders to supply high-quality housing around subway stations. If the project proceeds as planned, it will supply 4,763 homes, an increase of 3,059 added to the existing 1,704 in the city. The number may not be so large as to exert significant influence on the housing market, however, it is meaningful as the project will likely meet the most cherished wishes of families needing homes.
Once an area is selected for the public redevelopment project, it can enjoy various benefits, such as eased restrictions on floor area ratios, exemption from the sales price ceiling and simplified permit processing. The central and local governments have decided to retrieve part of development profits and designate them as land transaction permit areas to curb property speculation. If everything goes well, the project is expected to expand the housing supply and ensure optimal profits for builders and existing property owners while dampening speculation and providing public rental housing.
The Moon Jae-in administration's housing policy, which has focused on regulation to suppress price rises, has failed to attain its goal, only causing side effects. The fundamental solution lies in expanding the housing supply according to market principles, by incentivizing the private sector while curbing speculation and redeeming development profits to a proper extent. The new plan will not be without problems, however. At stake is how to harmonize different interests of major parties involved ― landlords, tenants and storeowners. No less challenging will be how to persuade the opposition political parties to cooperate in enacting related laws and regulations to lay the legal and institutional groundwork for the new type of public redevelopment.
Urban redevelopment by public contractors suits the policy direction of new Land, Infrastructure and Transport Minister Byeon Chang-heum, an advocate of increasing public housing supply in urban areas. However, neither supply expansion nor price stability should be all about housing policy. The ultimate solution is providing homes with sizes and forms desired by customers, at places where they want, and at prices they can afford to pay. On the occasion of the public sector-led redevelopment project, the government needs to fine-tune its policy to expand the housing supply through urban redevelopment.
