ED Housing policy coordination

Seoul, government should closely consult to prevent blunders

Oh Se-hoon took office as the new Seoul mayor Thursday, so all eyes are turning to which housing policies he will come up with. As one of his main campaign pledges, Oh pledged to speed up deregulation to provide 185,000 houses in the next five years by invigorating the private sector-led reconstruction and redevelopment of urban areas.

Apparently affected by Oh's pledges, the prices of apartments in the prosperous Gangnam area of southern Seoul have begun soaring again. For instance, the prices of units in the Eunma Apartment complex in Daechi-dong have reached record highs, while a unit in the Hyundai Apartment complex in Apgujeong-dong has skyrocketed by 1 billion won ($830,000) in just a month, in the aftermath of the April 7 by-election.

Oh's private sector-led housing pledges are different from the Moon Jae-in administration's Feb. 4 plan for a public-led expansion of the housing supply. In an apparent bid to preempt Oh's plan, Minister of Economy and Finance Hong Nam-ki said, “An adequate housing supply is not something that can be accomplished by a local government alone,” during a meeting of real estate-related ministers, Thursday.

As Oh's term ends in June 2022, he may face diverse setbacks in his bid to push for deregulation for his reconstruction policies. Well aware of the limit, Oh said that he would recommend relevant housing stimulus policies to the central government. Yet, he can revise related regulations to permit the construction of more than 35-story apartment buildings, which former Mayor Park Won-soon banned.

The Ministry of Land, Infrastructure and Transport, in its Aug. 5 plan last year, said that it would allow up to 50-story apartments in reconstruction projects initiated by the public sector. The ministry's stance was different from that of the Seoul Metropolitan City, as the then mayor had opposed any plan to raise the height limit above 35-stories.

There are growing concerns that housing prices, which have recently been showing signs of stabilizing, can pick up again should the government and Seoul City fail to coordinate policies. Given this, Oh should seek close consultation with the central government rather than sticking to his campaign pledges, to help stabilize housing prices and enhance resident's welfare.

Oh's election as the mayor was mainly attributed to the rising pubic anger over current government's policy blunders that have produced spiraling housing and rental prices. This is the reason why the ruling Democratic Party of Korea (DPK) should closely cooperate with Oh to solve the real estate problems.

Oh is expected to face diverse difficulties in carrying out his policies as the DPK has a monopoly on city's council, occupying 101 out of 109 seats and 24 of 25 district leaderships. The DPK should attentively pay heed to the voices of voters reflected in the by-elections. Oh, for his part, should also present measures to abide by his pledge to ease the tax burden and various regulations on owners of one home.