Another Round of Villas Without Parking... On the Ground: "Non-Apartment Housing Needs Infrastructure and Loan Reforms First" [Real Estate AtoZ]

Supplying 110,000 Non-Apartment Units in the Metropolitan Area by 2030
Easing Parking and Sunlight Regulations, Exempting Sports Centers and Daycare Facilities
Concerns Over Repeating 'MB-Style Small Homes' That Overlooked Living Quality
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As the supply of apartment jeonse (lump-sum deposit lease) listings in Seoul continues to dwindle and monthly rent burdens rise, there is once again a growing argument for expanding non-apartment housing options such as villas (multi-family and townhouse units), officetels, and the like. The government has announced measures to increase the supply of non-apartment housing in the Seoul metropolitan area through urban-style housing, officetels, and the remodeling of vacant commercial spaces and office buildings. However, there are concerns that issues from past expansions, such as parking shortages and insufficient lifestyle infrastructure, may once again resurface.

The Government Eases Regulations to Revitalize Non-Apartment Housing

A view of a villa-dense area in Seoul. Photo by Yonhap News Agency

According to the housing industry on May 31, the Ministry of Land, Infrastructure and Transport recently unveiled plans to expand the supply of non-apartment housing such as urban-style housing. The plan includes supplying 110,000 non-apartment units in the greater Seoul area by 2030. For urban-style housing, the target is to approve 77,000 units by 2030, and more than 33,000 units will be supplied by converting vacant commercial spaces and offices into studio apartments and officetels.

To achieve this, the government intends to ease restrictions such as the limit on the number of households and floors, sunlight rights criteria, and parking regulations for urban-style housing. If similar facilities such as community sports centers, senior citizen centers, or daycare centers already exist within a 300-meter radius, the requirement to provide additional community facilities may be waived.

The government has reignited the push for non-apartment supply due to concerns of a future housing shortage arising from sluggish apartment construction starts in 2022 and 2023. While reconstruction and redevelopment projects tend to take a long time from approval to occupancy, urban-style housing and officetels can be supplied relatively quickly on unused plots of land in inner-city or near business districts.

Loan Regulations and Villa Aversion Overlap ... Will Only the Supply of Non-Apartments Grow?

In the Seoul metropolitan lease market, monthly rentals have already surpassed half of all transactions. According to the recently published “2026 KB Real Estate Report” by KB Financial Group Management Research Institute, the proportion of monthly rentals in nationwide apartment lease transactions reached 50.6% cumulatively in January and February of this year. The figure stood at 50.7% in the greater Seoul area and 49.8% in Seoul. The proportion of monthly rentals in apartments, which was in the upper 30% range in 2022, has soared near the 50% mark over the past three years. Last year, the rate of monthly rent increase for apartments in the Seoul metropolitan area was 8%, far outstripping the 2.5% rise in jeonse prices.

Villas and officetels have historically acted as cushions in the lease market whenever apartment jeonse units became scarce. These types of housing provided a lower-cost urban living option for one- or two-person households, young people, and newly married couples compared to apartments. However, the mood changed after the rise of jeonse fraud. Tenants now harbor strong concerns about getting their deposits back, and the financial sector is also criticized for stricter loan screenings for non-apartment jeonse rentals.

On the ground, real estate agents specializing in villas report that even legitimate transactions are being blocked. One agent at a real estate office in Gwanak District, Seoul said, “Even with policy loans like Bogeumjari Jeonse Loan, transactions with sufficient safeguards are being excessively rejected in the field. Even for transactions with clear and feasible conditions, such as the cancellation of prior-ranking rights, there are repeated cases where banks uniformly avoid or reject them.” Given the severe impact of recent jeonse fraud, a conservative approach by financial institutions is inevitable, but treating all non-apartment housing as risky assets only limits housing options for young people and newlyweds further.

The supply has also shrunk dramatically. The number of approved non-apartment housing units fell from about 226,000 in 2015 to around 33,000 last year—a decrease of 85% in ten years. Urban-style housing peaked at up to 120,000 units nationwide and 74,000 units in the greater Seoul area in 2012, but due to the real estate PF (project financing) crisis and declining saleability, the supply has plummeted to around 5,000 units per year since 2023.

'The Shadows of the Apartment Republic' ... Have We Forgotten the Nightmares of 'MB-Style Small Housing' Without Parking?

An officetel located in Noryangjin, Dongjak-gu, Seoul. Photo by Jinhyung Kang

While the need to revive the shrinking supply is mounting, some point out that simply increasing the quantity will not restore market trust. During the Lee Myung-bak Administration, standards for parking lots and communal facilities in urban-style housing were relaxed, allowing for rapid development on small plots. However, lifestyle infrastructure such as parking lots, parks, and daycare centers failed to keep pace. This led to worsening street parking problems and deteriorating residential environments, while some older non-apartment units lost asset value and became vulnerable to jeonse fraud.

The deeply rooted apartment-centric structure of the domestic housing market is also a hurdle to reviving non-apartment housing. According to the 1990 Population and Housing Census, apartments made up around 22% of housing nationwide, while detached houses accounted for 66%. By Statistics Korea's 2024 data, out of a nationwide total of 19.87 million homes, apartments now constitute 12.97 million, or about 65%. In Sejong, the proportion is 87.4%, and in Gwangju, 81.8%—well over 80% in both cities. Despite the diversity of housing types, demand and perceived asset value remain concentrated on apartments.

On the front lines of permit approval, officials warn of the limitations of merely increasing the stock of villas and urban-style homes. A housing official at a Seoul district office said, “To revive demand for villas, lifestyle infrastructure like parking lots, parks, and daycare centers must be expanded together, but shouldering these costs is not easy for local districts. If infrastructure standards such as parking are lowered just to speed up supply, volumes may rise in the short term, but over the long term, we risk a repeat of the past—parking shortages and declining living environments in urban-style housing.”

Experts view non-apartment market revitalization as crucial because apartment supply alone cannot absorb short-term demand. Still, there is widespread agreement that simply boosting numbers by relaxing regulations, as in the past, is no longer sufficient. If non-apartment housing is to serve as a remedy for the jeonse shortage, loan and guarantee systems must also be improved—together with reforms in standards for parking, soundproofing, management, and lifestyle infrastructure.

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