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Gov’t to support construction of 1.35 mil. new homes by 2030
Minister of Land, Infrastructure and Transport Kim Yoon-duk explains the government's new housing plan during a briefing at the Government Complex Seoul, Sunday. Courtesy of Ministry of Land, Infrastructure and Transport
By Ko Dong-hwan
New housing plan supported by public builder Korea Land and Housing Corp.
The government will supply 1.35 million new homes by 2030 under a new housing plan announced Sunday to stabilize the real estate market in Seoul and the surrounding capital area.
This is equivalent to adding 270,000 new homes in Seoul, Incheon and Gyeonggi Province per year, and a net gain of 110,000 new homes compared to the average from 2022 to 2024.
Along with the home supply, the financial authority also announced tougher loan regulations on properties in overheated areas to rein in mounting household debt and soaring home prices.
Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol and Minister of Land, Infrastructure and Transport Kim Yoon-duk, along with other government ministers, held a meeting Sunday and announced the new housing plan. It is a follow-up measure to a June 27 mortgage regulation, which was seen as the government's strongest-ever measure by introducing a loan ceiling of 600 million won for home purchases in the Seoul metropolitan area.
The land ministry noted that the June 27 regulation instantly dampened nationwide housing debt, but apartment prices in Seoul have continued to rise slightly. Household debt again expanded in August, prompting the government to introduce "extraordinary supply measures" in the capital region.
Since 2019, the capital region has seen housing shortages while the rest of the country sees extreme oversupply. If the unbalance continues, the capital region will be short 92,000 new homes every year, including 26,000 units in Seoul, according to the land ministry.
To insulate the real estate market from excessive impacts, the government said it will actively expand the role and function of the public sector in housing supply through public developer Korea Land and Housing Corp.
To bolster housing supply in the capital region, the government will have the corporation exclusively develop public land for housing, instead of selling to private developers. The government will also redefine the purpose of nonresidential lands, promote sales of apartment units in areas with high demand and improve the regulatory environment for new apartment construction projects.
Over the next five years, the government estimates the plan will result in 372,000 new homes through developing public lands, 365,000 new homes through building new units in cities and 219,000 new homes by addressing regulations for private builders to construct new housing units.
Apartment buildings seen from atop Mount Nam in Seoul, Aug. 31. Yonhap
To offer more housing in cities and urban areas nationwide, the housing corporation will redevelop its old housing structures and government offices and develop unused lands, including those near local train stations, to build more housing units.
The urban housing provision nationwide will incorporate investments by private companies to varying degrees. For developing areas near schools and universities, the public housing corporation will partner with private firms. To redevelop unused residential buildings and small-size old residential communities, the private sector will lead while the public firm will provide support.
Public-private cooperation under the new housing plan will extend to redeveloping small-size commercial buildings in apartment complexes to transform them into residential spaces. Modular apartment construction, an emerging method to build apartments faster, will also be part of the plan.
Along with the housing plan, the government also rolled out a set of stricter mortgage regulations to maximize the impact.
Starting Monday, the loan-to-value ratio cap in regulated areas in Seoul — Yongsan, Gangnam, Seocho and Songpa — will be tightened from 50 percent to 40 percent for first-time homebuyers and single-home owners who will sell their existing property.
Mortgages for housing transactions and rental businesses in the regulated area will be banned as well, to seal any loophole in the government’s housing loan control.