Non-Apartment Housing Faces Eased Parking Regulations Amid Jeonse Shortage... Field Experts Say "Infrastructure and Lending Must Be Addressed 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
Speed of Supply Matters, But Residential Conditions Must Be Considered

As the supply of apartment jeonse (lump-sum lease) units in Seoul declines and the burden of monthly rent increases, calls to expand the supply of non-apartment housing such as villas and officetels are resurfacing. The government has announced measures to increase the supply of non-apartment housing in the Seoul metropolitan area through urban lifestyle housing, officetels, and the remodeling of vacant commercial and office spaces. However, there are concerns that these efforts could be hampered by heightened public distrust following recent jeonse fraud cases, stricter lending regulations, and the potential recurrence of parking shortages and lack of living infrastructure that emerged during previous expansions of urban lifestyle housing.

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 announced plans to expand the supply of non-apartment housing, such as urban lifestyle homes. The plan aims to provide 110,000 non-apartment units in the metropolitan area by 2030. Of this, the government targets 77,000 permits for urban lifestyle housing by 2030, and plans to convert more than 33,000 vacant commercial and office spaces into studio apartments and officetels.

To achieve this, the government will ease regulations on the number of units, floor count, sunlight standards, and parking requirements for urban lifestyle housing. If there are similar community facilities, such as sports centers for residents, senior welfare centers, or daycare centers within a 300-meter radius, the obligation to install additional communal facilities will be waived.

The government has revived the non-apartment supply policy due to concerns about a future supply gap following sluggish apartment construction between 2022 and 2023. While reconstruction and redevelopment projects take a long time from approval to occupancy, urban lifestyle housing and officetels can be supplied relatively quickly on leftover urban land or near business districts.

Increasing Non-Apartment Supply Amid Lending Curbs and Villa Aversion

In the metropolitan rental market, monthly rentals already account for more than half of all transactions. According to the '2026 KB Real Estate Report' recently published by KB Financial Group Management Research Institute, the share of monthly rentals in nationwide apartment lease transactions during January and February this year was 50.6%, surpassing the halfway mark. In the metropolitan area, it was 50.7%, and in Seoul, 49.8%. The share of apartment monthly rentals, which was in the high 30% range in 2022, has risen to nearly half in just three years. Last year, the monthly rent growth rate for apartments in the metropolitan area was 8%, significantly outpacing the jeonse price growth rate of 2.5%.

Villas and officetels have traditionally acted as a buffer in the rental market whenever the supply of apartment jeonse units decreased. This has provided single- and two-person households, young people, and newlyweds with affordable options for living in urban areas compared to apartments. However, the situation has changed since the recent jeonse fraud scandals. Tenants are now deeply concerned about losing their deposits, and there is growing dissatisfaction in the financial sector over the increasingly strict screening of non-apartment lease loans.

On the front lines, brokers specializing in villas report that even legitimate transactions are being blocked. An agent at a real estate office in Gwanak-gu, Seoul, said, "Even with policy-based loans like Bogeumjari Jeonse Loan, deals that have adequate safety mechanisms are being excessively rejected in the field," adding, "Banks are repeatedly avoiding or rejecting transactions across the board, even when there are clear and safe work procedures, such as priority lien cancellation." While the financial sector's conservative screening is inevitable given the scale of jeonse fraud damages, treating all non-apartment units as risky assets further limits the options for young people and newlyweds.

Supply has also dropped sharply. The number of non-apartment building permits shrank from about 226,000 units in 2015 to about 33,000 units last year, an 85% decrease in ten years. Urban lifestyle housing supply peaked in 2012 at 120,000 units nationwide and 74,000 units in the metropolitan area, but has plummeted to around 5,000 units annually since 2023 due to the real estate project financing (PF) crisis and declining profitability.

'Apartment Republic' and Its Dark Side: Have We Forgotten the Nightmare of 'MB-Style Small Homes' Without Parking?

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

While the urgency to revive supply is increasing due to the severe contraction, there are concerns that simply expanding the supply will not restore market trust. During the Lee Myung-bak administration, urban lifestyle housing was rapidly built on narrow plots as standards for parking lots and communal facilities were eased. However, living infrastructure such as parking, parks, and daycare centers failed to keep up. This led to worsening parking problems and deteriorating residential environments in alleyways, and some aging non-apartment units lost asset value, becoming vulnerable to jeonse fraud.

The solidification of the domestic housing market around apartments also makes it harder for non-apartment sectors to recover. According to the 1990 Population and Housing Census, apartments accounted for about 22% of all housing nationwide, while detached houses made up 66%. However, according to Statistics Korea in 2024, of the 19.87 million total housing units nationwide, apartments now number 12.97 million, making up 65%. In Sejong, the apartment share is already over 80% at 87.4%, and in Gwangju, it is 81.8%. Although there are various housing types, actual demand and asset perceptions are concentrated on apartments.

Local permit officials warn that simply increasing the supply of villas and urban lifestyle housing is not enough. A housing official at a district office in Seoul said, "To revive demand for villas, living infrastructure such as parking, parks, and daycare centers must be expanded together, but it is difficult for local governments to bear this burden," adding, "If infrastructure standards such as parking are lowered to speed up supply, the number of units may increase in the short term, but in the long run, parking shortages and deteriorating residential environments, as seen in past urban lifestyle housing projects, may be repeated."

Experts agree that revitalizing the non-apartment market is necessary, as apartment supply alone cannot absorb demand in the short term. However, many point out that simply increasing supply by easing regulations, as in the past, is not sufficient. They argue that to restore non-apartment units as a buffer for jeonse shortages, not only the lending and guarantee systems but also standards for parking, soundproofing, management, and living infrastructure must be improved simultaneously.

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