Housing Construction Association Urges Strongly to Ruling Party and Government for High-Density Urban Development to Stabilize Housing Prices

Increase Housing Supply by Developing High-Density Urban Areas to Stabilize Prices
Relax Floor and Floor Area Ratio Regulations to Revitalize Reconstruction

(Photo by Yonhap News)

[Asia Economy Reporter Moon Jiwon] The Korea Housing Construction Association has strongly urged the government that, for stabilizing housing prices, prioritizing high-density development in urban areas should come before expanding supply in the outskirts of Seoul.

On the 8th, the association announced that it delivered a proposal titled "Expansion of Urban Housing Supply for Housing Price Stabilization" to government authorities including the Prime Minister's Office, the Ministry of Land, Infrastructure and Transport, and the National Assembly.

The association pointed out, "the main cause of rising housing prices is not speculative demand but the income growth of the purchasing class and abundant market funds amounting to 1,500 trillion won," adding, "urban housing supply is extremely limited, and with some speculative demand joining in, it is driving up housing prices."

It further argued, "Strong real estate measures and expanding supply in the outskirts of Seoul cannot satisfy the increasing demand for urban housing in Seoul and other areas," and "expanding urban housing supply will be a swift solution for stabilizing housing prices."

The association explained that a policy shift toward high-density development in urban areas is urgently needed.

Currently, the Enforcement Decree of the National Land Planning and Utilization Act restricts the residential ratio in commercial areas to less than 90% (less than 80% in Seoul and Gwangju), which hinders efficient land use.

The association stated, "As a measure to expand urban housing supply for housing price stabilization, the restriction on the residential ratio of less than 90% in commercial areas should be abolished, and a public contribution plan should be prepared."

Additionally, the association proposed easing floor restrictions and increasing floor area ratios to revitalize reconstruction and redevelopment.

It explained that advanced countries like the United States and Japan, which experienced housing price surges earlier, have implemented 'floor area ratio incentives' as a measure to curb housing price spikes and increase urban housing supply.

The association pointed out, "In Korea, by suppressing urban development rather than expanding supply in urban areas, a vicious cycle is occurring where urban housing prices rise, and through a balloon effect, housing prices in the metropolitan area and major regional cities also rise in succession."

It continued, "Compared to the indirect costs caused by urban expansion, the increased benefit costs from proximity between residence and workplace are greater, so expanding supply in urban areas seems necessary," emphasizing, "concerns that excessive profits will occur for landowners and developers can be resolved through public rental housing supply and payment of public contributions."

Meanwhile, the Korea Housing Construction Association has over 7,800 member companies consisting of medium and small construction firms. Together with the Korea Housing Association, it represents the domestic housing industry.

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