600,000 New Homes Planned in Metropolitan Area by 2012
By Oh Young-jin
Staff Reporter
The government Thursday unveiled an ambitious plan to jack up the provision of new housing, signifying a turnaround in the government's anti-housing speculation policy, from heavy taxes to additional provision.
Some experts say that this plan, the second large-scale construction project under President Lee Myung-bak, will prove to be helpful in stoking the housing prices for which spirals were put in abeyance following last year's global financial crisis.
The first is a four-river restoration project with a price tag of billions of dollars. Lee is the former CEO of a construction firm.
Under the plan, a total of 600,000 new homes will be built in Seoul and its neighboring areas at a cost of 4 trillion won by 2012. The figure represents a 33-percent hike from the existing plan.
The Ministry of Land, Transport and Maritime Affairs made public the measure in a report to President Lee Myung-bak at Cheong Wa Dae.
Out of the total, 320,000 new homes will be set up in "greenbelt" areas, where development is restricted to prevent urban sprawl.
The government is planning to lift the development ban so as to make space available for new housing projects. The latest plan hastens the previous timetable by six years to finish the construction by 2012.
In order to prevent speculation, the buyers of these homes will be barred from selling for seven to 10 years. They will also be obligated to live in them for five years.
Another special feature in the plan is to set aside 20 percent of the total new housing for those who have never owned homes before.
Some of new homes to be built in Gangnam-gu and Seocho-gu, upscale residential areas south of the Han River, will be provided at a price of 11 million won per 3.3 square meters, half of the going price for the existing apartments in the areas.
The so-called Gangnam areas are home to the priciest apartments that have seen a stiff hike in their value, and targeted for a series of anti-speculation measures.
President Lee expressed his hope that the project would meet demand for cheaper homes from newly married couples, create more jobs for ordinary people and ease a property bubble.
"This plan is intended to provide more opportunities to young couples living in the capital area to own their apartments," Lee was quoted as saying by his spokesman Lee Dong-kwan. "It will also be helpful in stabilizing housing prices as well as lowering unemployment rates."
Regarding how to fund this massive project, Han Man-hi, the ministry official in charge of large-scale housing projects, said that 1.4 trillion won will be required every year unitl 2012. "About 250 billion won per year will be earmarked from the state budget, while the remainder will be from special funds."
Real estate agents said that the plan would be easier said than done.
"Those designated areas would be the only ones where one can get an apartment at such a low price in the Gangnam area," one agent said. "No matter what restrictions may be, the prices will eventually go up to par with those of the neighboring areas." He said that the areas to be freed from the greenbelt will also be the target for speculation, triggering a general rise of land prices in the Seoul and metro areas.
Under the previous Roh Moo-hyun administration, heavy taxes were introduced to put down housing speculation but the plan backfired, sending its popularity to a low that it didn't recover from until the end of its term. Roh's predecessors used a combination of supply and taxes to bring speculation under control but all without great success.