City: "Seoul Housing Price Surge Not Due to Supply Shortage... National Real Estate Sharing System Implementation Plan to Be Prepared Soon"

[Asia Economy Reporter Kim Yuri] The Seoul Metropolitan Government has dismissed concerns about a "shortage of supply within Seoul" as a cause of the rapid rise in Seoul housing prices, stating that "there is no shortage of supply in Seoul." Additionally, it emphasized its commitment to preventing the spread of unfairness through real estate by implementing the "Real Estate National Sharing System," which has been repeatedly mentioned recently by Mayor Park Won-soon.

On the 6th, Jin Hee-seon, Deputy Mayor for Administration 2 of Seoul, held a press briefing at Seoul City Hall on major issues such as housing supply and demand in Seoul, stating, "The supply of housing in Seoul is not insufficient compared to previous years," and added, "There have been some claims that the supply has become even more insufficient due to the cancellation of redevelopment zones since Mayor Park Won-soon's inauguration, but this is also not true."

The Seoul Metropolitan Government presented numerical data on housing supply in Seoul from 2008 to 2013, 2014 to 2019, and the next six years (2020?2025) to support this claim. It explained that an average of 61,000 households (34,000 apartments) were supplied annually from 2008 to 2013, and an average of 78,000 households (36,000 apartments) annually from 2014 to 2019. For the next six years starting this year, an average of 82,000 households (49,000 apartments) per year is expected to be supplied, indicating that supply is not insufficient. Ryu Hoon, Director of the Seoul Housing and Architecture Headquarters, emphasized, "The opinion that supply is insufficient does not align at all with statistical facts," and stated that current market concerns are due to an exaggerated shortage of supply theory. However, the city included public rental housing in the supply figures and did not consider demolitions in the tally.

Claims that Seoul's supply significantly decreased due to "Mayor Park's New Town cancellations" have also been refuted through Seoul housing supply statistics. From 2005 to 2011, 401 New Town and redevelopment zones were additionally designated, intensifying conflicts among stakeholders. In response, the city had already announced the "Five Major Directions for New Residential Redevelopment" in April 2011, before Mayor Park's tenure, stating that "areas requested by residents and planned zones with long-term construction restrictions will be canceled." Director Ryu explained, "At that time, Seoul Plaza was the site of daily protests among parties involved in redevelopment conflicts," and added, "The April 2011 announcement of the Five Major Directions for New Residential Redevelopment included the policy of 'not proceeding with redevelopment where it is not feasible,' and subsequently, 394 zones were canceled. Most of the canceled zones were practically difficult to develop."

The Seoul Metropolitan Government acknowledged, however, that the phenomenon of housing listings being withheld has intensified due to an increase in purchases by non-residents and multi-homeowners. It also identified the abundance of liquidity in the market due to macroeconomic changes as a major cause of housing price increases. Ultimately, these issues combined to drive up housing prices, rather than a problem of supply shortage in Seoul.

Director Ryu stated, "The recent Seoul housing market shows a strong trend of financialization of real estate assets due to excessive liquidity inflows," and added, "Supply is sufficient, but speculative demand has expanded more than actual demand from residents outside Seoul and large homeowners." He pointed out, "The increase in the proportion of housing purchases by non-residents since 2016 indicates an expansion of investment (speculative) demand," and "The number of multi-homeowners in Seoul is also 899,000, accounting for 15.8% of the total, and this trend is gradually increasing." He further emphasized, "With 173,000 newly registered rental housing units over two years and the expansion of rental registration businesses, the phenomenon of long-term withholding of listings is expected to continue."

He also criticized the lack of consistency in government policies, which has sustained psychological anxiety. With housing and real estate policies changing every time a new government begins, citizens' distrust in policy consistency has persisted, leading to ongoing expectations for "regulatory easing" policies from the next government.

Accordingly, the Seoul Metropolitan Government reiterated the need to strengthen property holding taxes and to realize official property prices to prevent multi-homeownership from causing increased unearned income and deepening inequality. The Real Estate Price Disclosure Support Center, recently mentioned by Mayor Park, is also planned to be established at the city level. Director Ryu stated, "There is almost no role for metropolitan governments beyond the central government and local governments in reforming the disclosure system and raising the realization rate," and added, "Seoul plans to actively support the central government and autonomous districts in calculating official property prices and work to raise the realization rate." The city intends to actively participate in the government's official price realization roadmap this year, propose system improvements, and conduct surveys and analyses on the "difference between official prices and actual transaction prices."

The "Real Estate National Sharing System," previously mentioned by Mayor Park in his New Year's address, is also planned to have an execution plan prepared soon. Deputy Mayor Jin said, "The idea of a sharing fund originated from the awareness that real estate is one of the causes of unfairness and inequality," and added, "To implement this, discussions on legal and institutional amendments with the government and policy formulation at the Seoul city level are necessary. Currently, related departments such as the Housing and Architecture Headquarters have formed a task force (TF) to develop policies. We will provide further details once the content is organized."

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