"If Only Reconstruction Proceeds as Planned..." Six Times the Supply of Taereung Golf Course Within the Year

37 Complexes Planning Resident Recruitment for the Rest of the Year, Over 60,000 Households
Conflicts Arise Due to HUG Price Controls, Half of Seoul Redevelopment Supply Disrupted
"New Agreement on 'Appropriate Sale Prices' Needed... Stabilizing Supply to Alleviate Concerns"

[Asia Economy Reporter Yuri Kim] It has been confirmed that if reconstruction and redevelopment proceed normally according to procedures, more than 60,000 housing units can be additionally supplied within Seoul by the end of the year. This amount is more than six times the expected supply of 10,000 units from Taereung Golf Course, which the government proposed as a measure to expand housing supply. However, according to Asia Economy's investigation, more than half of the units waiting for sale are expected to face delays in sales within the year. The most important cause of project delays is identified as the Housing and Urban Guarantee Corporation (HUG)'s price regulation on sale prices and the private land sale price ceiling system to be implemented from the end of this month. Without the government's excessive price control, smooth housing supply would be possible even without separate supply measures such as securing idle land or high-density urban development. ▶Related article on page 3

On the 22nd, Asia Economy requested Seoul City and compiled data on 'maintenance project complexes scheduled to recruit residents for the remaining period of this year,' totaling 37 sites and 61,235 housing units. These complexes are in the final stages of maintenance projects, and if they proceed on time, they are classified as able to apply for approval of resident recruitment announcements within the year. Among these, the net increase in units excluding union member quotas (general sales and rental) amounts to 30,202 units.

The supplyable units are concentrated in the Gangnam area. In Seocho-gu alone, 16,860 units are in the final stages of the project, and Gangdong-gu and Songpa-gu also have 13,219 units and 5,789 units respectively. In the Gangbuk area, more than 5,000 units are expected to be supplied in Dongdaemun-gu (6,935 units) and Seongbuk-gu (5,529 units).

However, many of these projects are realistically unlikely to be sold within the year. This is explained as due to HUG's 'high sale price review,' which effectively holds the authority to decide sale prices through issuing sale guarantees. A representative of a reconstruction union in Gangnam said, "The sale prices suggested by HUG are about half of the market price." He added, "As a result, conflicts among residents are triggered in most complexes during the sale price review process." The industry estimates that roughly half of the total supply is facing schedule disruptions due to sale price regulations. In fact, even the Jugong Apartments in Dunchon-dong, Gangdong-gu, with a total general sale volume of 4,786 units, have had their sales delayed for several months due to HUG's excessive sale price regulations.

The industry claims that last year's housing supply in Seoul falling short of 40% of the original plan was also due to excessive sale price regulations. According to Real Estate 114, at the beginning of last year, the planned supply volume by companies in Seoul was 72,873 units, but the actual supply was only 27,659 units. Furthermore, with the private land sale price ceiling system to be implemented from the 29th, there are concerns that redevelopment and reconstruction supply will shrink even more.

Experts point out that if a new consensus on 'appropriate sale prices' is reached and the supply of maintenance projects is normalized, concerns about market supply shortages can be alleviated to some extent. Doosung Kyu, Senior Research Fellow at the Korea Construction Industry Research Institute, said, "In a situation where development profits are limited by measures such as the reconstruction excess profit recovery system, an approach that unconditionally controls sale prices below a certain level only increases conflicts and disrupts the balance between supply and demand."

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