On the morning of the 4th, Minister of Land, Infrastructure and Transport Byun Chang-heum is giving a’briefing on plans to expand housing supply for 3080+ metropolitan areas’ in the auditorium of the annex of the government building in Jongno-gu, Seoul. [뉴스1]
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“I wonder if I can trust and wait this time. A sufficient amount of housing can be supplied to downtown Seoul. I don’t think it will be too late to buy a house after housing supplies increase.”
Minister of Land, Infrastructure and Transport Byun Chang-heum appeared on a broadcast on the 7th and explained the 2·4 supply plan and was confident in this way. Regarding the second and fourth supply measures, the 25th real estate countermeasure since the inauguration of the current government, the government emphasized, “This is a breakthrough policy different from the previous one,” and “Please trust this time.” However, the controversy over the second and fourth countermeasures is heating up.
① How many households are supplied?
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Controversy over 2.4 measures for’supply shock’. Graphic = Reporter Kim Young-ok [email protected]
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Most of the supply of this measure is carried out through maintenance projects. It is a method of supplying by destroying existing houses and increasing the number of houses. As many new houses as announced by the government this time can be built, but there are also many houses that are being demolished.
However, there is no explanation for the number of lost homes in the data distributed by the Ministry of Land, Infrastructure and Transport. In response, an official from the Ministry of Land, Transport and Maritime Affairs responded that there was no problem, saying, “When calculating the existing redevelopment and redevelopment permits or completion quantities, the total amount is calculated.”
In the case of direct public maintenance projects, floor area ratio incentives are given up to 120%, and floor area ratios are applied up to 700% for station area development. The Ministry of Land, Infrastructure and Transport explained that the net increase in housing volume is higher in this measure (1.3 to 1.5 times) than the existing maintenance project (1.1 to 1.3 times).
Of the 830,000 households identified as supply in this measure, 470,000 households are excluded from the supply of new housing sites and new construction purchase agreements. According to the government’s explanation, the number of’new houses’ that is purely increasing is from 110 to 160,000. In addition, 101,000 households, including 41,000 non-housing remodeling units used as youth housing by renovating empty hotels in the city center, and 60,000 newly purchased houses are rental houses. It is pointed out that the purchase of new construction is unreasonable to be viewed as a’new supply’ because a privately-built house is purchased by public companies such as LH and sold as rental housing.
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Amount of housing supply available by business type in Seoul. Graphic = Reporter Kim Young-ok [email protected]
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② Will it be supplied within 5 years?
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The plan is to secure land for housing in the city center by 2025. “We will supply 830,000 households” and “We will secure the land for 830,000 households”, which is a distinct meaning. The government also explained that in the case of the’public direct implementation maintenance project’, the project period will be shortened from 13 years to 5 years. However, these five years are not until moving in after completion of the project, but until’the point of commencement of residents’ migration’. Normally, it takes about 3 years to move in to a new apartment after demolition and construction begins after relocation is complete.
Many point out whether the number of houses can be recklessly increased without preparing for basic urban elements such as schools and parks as well as transportation measures. Lee Eun-hyung, a senior researcher at the Korea Institute for Construction Policy, pointed out, “There is a possibility that development will be difficult if infrastructure construction and urban competitiveness are not considered.”
The project may be delayed further if residents near the development site object. In the case of Taereung Golf Course (10,000 households) and the Gwacheon Government Complex (4,000 households), which are the core of the government’s ‘8·4 housing supply plan’ announced last year, despite the government’s site, the objection of local governments and residents I can’t even make a business plan. Oh Seung-rok, head of Nowon-gu, said, “If you build an apartment with 10,000 households on the 830,000m2 site of Taereung Golf Course, it will be a high-density apartment like a chicken coop, so the residential environment will be very poor.” Residents of Gwacheon City, who oppose the development of new housing sites, argue, “Building 4,000 homes on the Gwacheon Government Complex is a tyranny of the central government that does not take into account the self-sufficiency of Gwacheon City, with a population of 50,000.”
③ Is it a real benefit to participate?
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Example of sharing development profits for public direct implementation of reconstruction. Graphic = Reporter Kim Young-ok [email protected]
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The core of this countermeasure is’Gong Gong-do’. The government emphasizes that if the public is leading, the monopoly of development profits can be prevented and business progress can be accelerated. Landlords participating in public-led projects are exempted from the reconstruction excess profit return system (re-return) and the obligation to live for two years as a member. However, only up to 30% of the profits generated from the increase in floor area ratio and exemption from re-recruitment are returned to the land owner and the rest is taken by the public. It is unclear whether it will act as an incentive to attract landlords in a situation where apartments are sold out once they are built. In addition, it is predicted that entrusting the property of individual landlords to the public will be burdensome.
In the existing reconstruction and redevelopment promotion areas, positions are different. Although the Gangbuk region expresses expectations for various incentives proposed by the government, the situation in the Gangnam region is different. An official from the maintenance industry said, “In Gangnam, which emphasizes’luxury apartments’, we show reluctance to public implementation.”
④ Will the house cost be determined?
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In this measure, no specific business location was announced. However, after the announcement of the measures, those who bought land or buildings within the area where the project was to be implemented would not give priority to apartment sales. This means that it will be liquidated in cash with an appraisal amount lower than the market price. Controversy over unconstitutionality has been raised, saying that it is’excessive infringement of property rights’, but the Ministry of Land, Infrastructure and Transport said, “While preparing countermeasures, it went through a legal review and decided that it was not unconstitutional.”
There are also observations that the seeds of the transaction will dry out in the market. In the online real estate community, complaints such as, “It is said that you should choose only old houses or expensive new apartments that cannot be redeveloped or rebuilt in public.” As a result of this countermeasure, it is expected that in Gangbuk, Seoul, where there are many public-led project sites, the housing transaction market will contract significantly due to the disconnection of transactions, and Gangnam, which is not related to public development, will benefit from reflection. This means that the difference in house prices between Gangnam and Gangbuk in Seoul could widen further.
Reporter Kim Won [email protected]
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