Delaying Deregulation and Focusing on Supply Expansion... Yoon Government's First Step Toward Half-Price Housing for Youth

Yukyung Foundation Secures Neungdong Site
Seoul City Reviews 2017 Transit-Oriented Youth Rental Housing Project
Over 10,000㎡ Site Area Allows Supply of 1,700?2,000 Units
Focus on Youth Housing Capacity in First Year of Term... Supply of Cost-Price Housing and First Homes Near Transit
Criticism from Inside and Outside Transition Team as House Prices Stir After Presidential Election
Yoon Government Shifts to Minimize Side Effects of Deregulation... Emphasizes Supply Expansion

[Asia Economy Reporter Kangwook Cho] The first real estate policy direction of the Yoon Seok-yeol administration is focusing on ‘expanding supply.’ The Presidential Transition Committee’s decision to utilize the Yukyoung Foundation Neungdong site as the first new housing supply site is interpreted as a move to send a strong supply signal to the market. As housing prices began to stir after the presidential election, the initially proposed ‘regulation easing’ shifted toward minimizing side effects, and the administration decided to focus all efforts on expanding supply. In particular, there is likely to be emphasis on the early supply of ‘Yoon Seok-yeol-style’ half-price apartments in urban areas to help young people and the homeless, whose housing ladder has collapsed due to soaring housing prices, to own their own homes.

◆ Securing ‘Neungdong Site’ as the First New Supply Site... Possible Supply of 2,000 Households = Since the launch of the Transition Committee, the Ministry of Land, Infrastructure and Transport and the Seoul Metropolitan Government have formed a task force to implement urban housing supply, concretizing project models such as ‘Youth Cost-Price Housing’ and ‘First Home near Subway Stations,’ and have been reviewing ways to utilize national and public land such as the Seoul Medical Center site and Yongsan Maintenance Depot site. These sites had already been included in housing supply plans under the current government but were stalled due to opposition from local governments and residents. Especially, securing new sites is essential to achieve the campaign promise of supplying 2.5 million households made by President-elect Yoon Seok-yeol. Utilizing the Neungdong site as a supply site this time also symbolizes the new government’s first acquisition of a new supply site.

The Neungdong site owned by the Yukyoung Foundation was previously considered in 2017 for the ‘2030 Youth Rental Housing near Subway Stations’ project promoted by the Seoul Metropolitan Government. With a site area of over 10,000 square meters, it is expected that if youth rental housing is built, at least 1,700 to 2,000 households could be supplied. The site, adjacent to Children’s Grand Park Station on Subway Line 7, is currently partially used as a parking lot, while the rest has been left as vacant land for several years. It was once put up for auction in 2010 with an appraised value of 127.5 billion KRW but was unsuccessful.

◆ Supplying ‘Half-Price Housing’ to Youth in the First Year of the New Government = The Yoon administration plans to supply half-price housing targeting young generations, such as youth cost-price housing and first homes near subway stations, starting from its first year in office. Since housing prices fluctuated further due to ‘panic buying’ by young people during the current administration, the plan is to focus efforts on supplying housing for youth to stabilize the overall market. To this end, new housing sites will be continuously developed to fill supply volumes. There is also consideration to change district plans in some areas of the ongoing 3rd New Towns (Goyang Changneung, Bucheon Daejang, Namyangju Jinjeop, etc.) to supply about 2,000 households through pre-sale in the second half of this year. Discussions are also underway to secure ‘first homes near subway stations’ through existing supply projects such as public redevelopment/reconstruction and urban public housing complex projects.

President-elect Yoon previously pledged to supply a total of 2.5 million households, including ▲1.42 million households on public land ▲470,000 households through redevelopment and reconstruction ▲200,000 households through urban and subway station complex development ▲180,000 households through national/public land and vehicle depot complex development ▲100,000 households through small-scale maintenance projects ▲130,000 households through other projects such as Seoul Win-Win Housing. By housing type, the pledge includes ▲300,000 youth cost-price housing units ▲200,000 first homes near subway stations ▲210,000 public sale housing units ▲500,000 public rental housing units ▲110,000 private rental housing units ▲1.19 million private sale housing units.

◆ ‘Supply Expansion’ First... Sequential Improvement of ‘Regulation Easing’ = Instead of the initially expected policy direction of ‘regulation easing,’ supply expansion has been prioritized as the administration’s first step to stabilize the market and launch the government. The Transition Committee’s real estate task force even considered abolishing the three lease laws, which are regarded as a major policy failure of the current government. They also announced a one-year postponement of the capital gains tax surcharge on multiple homeowners and measures to revitalize private rental housing. Relaxation of the excess profit recovery system for reconstruction and exemption from detailed safety inspections for reconstruction of apartment complexes over 30 years old were also considered.

However, criticism arose that such regulation easing signals were stimulating housing prices, and a cautious approach to minimize side effects strongly emerged inside and outside the Transition Committee. Nominee for Minister of Land, Infrastructure and Transport Won Hee-ryong also indicated that “regulation easing or supply that could lead to wrong price signals is not part of the Yoon Seok-yeol administration’s future vision,” suggesting that institutional improvements will be made while monitoring market conditions. The detailed framework for regulatory improvements is expected to be disclosed only after the new government takes office.

This content was produced with the assistance of AI translation services.