[Policy Pulse] Between Apartments and Villas... Let's Build Mid-Rise, High-Density Housing

Do You Know the 400% Floor Area Ratio “Seoul-style Renewal Model”?

Halved Approvals, Soaring Construction Costs… Limitations of Conventional Redevelopment

Consolidating 5–6 Project Lots into a Single Block, Maintaining Heights of 7–12 Storie

There is a broad consensus on the necessity of expanding housing supply to stabilize the housing market and improve residential quality. The prevalence of provocative phrases such as "expanding housing supply is the only solution" and "just supply, no questions asked" reflects the acute urgency for supply in the market. However, despite the government’s strong commitment, ambitious targets, and repeated announcements of new measures, the downward trend in housing supply has been difficult to reverse.

Last year, housing supply performance across all indicators—permits, construction starts, and completions—fell to half the level of 2016. This warning sign is evident nationwide, in the greater Seoul area, and in Seoul itself. Nationwide, 746,000 homes were granted construction permits in 2016, but by 2025 that number had been slashed to 380,000, effectively halved. In the same period, housing starts in Seoul plunged from 97,000 units to just 32,000. Notably, last year in Seoul, apartments accounted for 91% of completed housing, while the number of non-apartment homes—single-family, multi-family, multiplex, and row houses—was a mere 5,089. The supply of non-apartment housing, which once served as an accessible housing ladder for ordinary citizens, has practically ceased.

Last year, the government presented an ambitious target through its "September 7 Housing Supply Expansion Plan," aiming for annual construction starts of 270,000 units in the greater Seoul area and 67,000 units in Seoul alone. This figure is 1.74 to 2.17 times the average annual supply for the past three years (2023—2025). Yet, in the first half of this year, construction starts were just 66,000 for the greater Seoul area and 13,000 for Seoul, barely meeting the three-year first-half average (65,000 for the greater Seoul area, 13,000 for Seoul). Without extraordinary measures, the achievement rate for this year’s targets is projected to reach only half. Was the target unrealistic from the start, or has the policy delivery mechanism broken down?

It is by no means easy to reverse housing supply trends in a short period. Yet, a look back at Seoul’s housing history over the past half-century provides answers. Breakthroughs always came when land supply, building and parking regulations, sales and finance systems, and tax policy worked in concert. For example, in the 1960s, land readjustment projects supported single-family housing supply; in the 1970s, row houses accounted for 40% of all new supply; and in the late 1970s, the development of Gangnam and the designation of apartment zones marked a turning point. In the 1980s, the Housing Site Development Promotion Act, the National Housing Fund, and the plan for two million housing units—along with joint redevelopment projects—ushered in the era of large-scale apartment complexes.

Conversely, excessive regulation brought supply to an abrupt halt. Multi-family and multiplex homes were the main drivers of Seoul’s housing supply after deregulation in the 1990s, but were dramatically reduced when parking standards were tightened in 2002. Just before the stricter regulation, 116,000 multi-family and multiplex homes were approved in 2002 to beat the deadline, but by 2005, approvals had plummeted to just 7,000—a stark demonstration of how sensitive the market is to policy and regulatory shifts.

Reducing modular construction costs... Diverse forms such as rental and dormitory models

Designation of housing supply promotion districts... Bold incentives needed

Since the 2000s, innovation in urban housing supply has been achieved by "battling existing regulations." By partially relaxing parking and building rules, urban lifestyle housing (introduced in 2009) and transit-oriented youth housing (2016) were launched, and officetels with floor heating became established as quasi-residential units. Recently, the government also announced it would pursue 77,000 new urban lifestyle housing permits by 2030 through regulatory easing.

However, thus far, government housing policy has merely extended traditional methods such as public land development, redevelopment, reconstruction, and the purchase of private rental units. With construction costs skyrocketing and developable land in the city center running out, repeating traditional approaches makes it difficult to meaningfully increase supply or to meet the evolving needs of households and the changing structure of housing demand.

Acquiring additional public land within Seoul is now nearly impossible, while new satellite cities in the greater Seoul region are no longer effective substitutes for Seoul’s housing. Large-scale redevelopment and reconstruction projects are stalled due to insufficient profitability; moreover, they face limitations such as high presale prices and low resettlement rates for original residents. Plot-by-plot development centered on multi-family and multiplex housing struggles to provide sufficient parking, green space, safety, and essential community facilities, while officetels and urban lifestyle housing are clearly inadequate for family-oriented residential complexes.

There is now a need to develop new housing supply models and types centered on residential welfare. Neither expensive, high-rise apartment complexes nor the haphazardly developed low-rise villas represent viable solutions—a "third option" is required. This is the introduction of the "mid-rise, high-density Seoul-style renewal model." Under this model, small-scale projects would integrate five to six adjacent plots (about 1,000 square meters) as a basic unit, while master planning would link five to six such project sites as a single block. Building heights would be managed in the mid-rise range (up to 7–12 stories) to maintain cityscapes and daylight rights for neighboring plots, but flexible coverage ratios and special allowances for public rental, small-scale, shared housing, and residential welfare would be leveraged to permit floor area ratios of up to 350–400%.

A villa-dense area in Seoul. Photo by Yonhap News

By utilizing the increased floor area ratio, more than 50% of units would be affordable small- to mid-sized homes of 50–60 square meters. The type of community amenities found in large apartment complexes would be jointly developed and supported by public and private sectors at the block level, and parking areas would be minimized through a combination of robotic parking and artificial intelligence (AI) autonomous driving technology. Moreover, the active adoption of modular construction methods would shorten the construction period and dramatically reduce building costs.

For this model to work on the ground, it is essential to establish a sophisticated implementation framework. First, the initiative (WHO) requires a clear division of roles among the public sector, residents, and professional developers (such as Korea Land & Housing Corporation (LH), Seoul Housing & Communities Corporation (SH Corporation), or private developers) to ensure momentum. In terms of supply types (WHAT), various housing forms—including youth dormitories, public rentals, long-term 10–20 year conversion rentals, and benefit-sharing homes—should be provided within integrated neighborhood complexes to increase variety. From a method perspective (HOW), designated housing supply promotion districts should not only feature bold deregulation and incentives and support for land acquisition, but should also ensure a portion of development profits are allocated to increasing public rental housing and expanding community facilities.

Seoul’s housing supply history is not one of simply adhering to past methods, but of consistent innovation to develop new types that meet the needs of changing times. The same holds true today. To address supply bottlenecks, rising construction costs, surging presale prices and owner contributions, as well as rapid advances in AI and building technology, a third path must be charted. The government and Seoul city authorities must clarify project scale and density, public support, and the allocation of development profits, and foster these elements as the foundation for Seoul’s new housing model. What is needed now is not merely a housing policy to increase quantity, but one that creates a new urban living model and forms of housing that future generations can afford and inhabit for many years to come.

Changhum Byun, Professor of Public Administration at Sejong University and former Minister of Land, Infrastructure and Transport

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