Taereung Development Downsizing and Reconstruction Easing Face Difficulties, 7.10 Measures at a Standstill

[Asia Economy Reporter Yoo In-ho] The government's announced real estate supply measures are just one week away.

However, unlike the multi-homeowner regulation measures that were prepared within a week after President Moon Jae-in instructed the measures, the supply expansion plan has shown little progress even after nearly a month.

Through two meetings of the government-wide task force (TF) on housing supply expansion, the government and local governments have exchanged various opinions, but the only officially confirmed additional measure is the development of the Taereung Golf Course site.

Aside from the five major policy directions announced during the July 10 measures, there appears to be no 'special' measures to calm market instability.

According to the Ministry of Land, Infrastructure and Transport and the Seoul Metropolitan Government on the 24th, the TF formed after the July 10 real estate measures has been discussing various housing supply expansion plans through working-level meetings involving government ministries such as the Ministry of Economy and Finance, Ministry of Land, Infrastructure and Transport, Ministry of National Defense, and local governments including Seoul, Gyeonggi, and Incheon since the first meeting on the 15th.

However, it is reported that there is a temperature difference among meeting participants regarding the supply expansion plans discussed in the two working-level meetings held so far.

The main issue is revitalizing reconstruction and redevelopment. With the cancellation of the greenbelt release in the Gangnam area, revitalizing reconstruction and redevelopment is considered the most certain signal for supply expansion.

The Seoul Metropolitan Government is understood to have continuously requested the normal promotion of reconstruction projects, mentioning specific target areas such as Jamsil, Yeouido, and Apgujeong in the two meetings.

The proposal is to ease apartment reconstruction permit regulations that have been halted since 2017 and increase floor area ratio to supply rental housing in urban areas. However, the Ministry of Land, Infrastructure and Transport, the main ministry in charge, has responded negatively. While stating that reconstruction permits fall under Seoul's jurisdiction, they have drawn a line citing the need for legal amendments. Regarding the Seoul Metropolitan Government's proposal to raise the floor area ratio, the Ministry of Land, Infrastructure and Transport expressed the opinion that "legal amendments are necessary."

The development scale of the Taereung Golf Course area has been significantly reduced compared to initial expectations. This is because the site of the Korea Military Academy, which was expected to be developed together with the Taereung Golf Course, has been excluded from the target.

Prime Minister Chung Sye-kyun drew a line on the development of the Military Academy site during the National Assembly's government questioning session on the 23rd, stating, "It is not currently under consideration."

The total supply scale has also been reduced from a maximum of 30,000 households to around 10,000 households.

Therefore, apart from the Taereung Golf Course development, the supply expansion plans that have taken shape so far remain at the level of previously announced measures such as ▲ high-density urban development ▲ increasing floor area ratio in the 3rd new towns ▲ discovering idle land and national facility sites around cities ▲ public redevelopment and reconstruction ▲ utilizing vacant commercial and office spaces in urban areas, without any progress.

In the case of high-density urban development, if the station area range expands to 350 meters and the floor area ratio increases, urban aesthetics and traffic congestion must be endured.

The housing increased through high-density development in station areas will mainly be rented to youth and newlyweds, so there are clear limits to satisfying the demand for home ownership.

Although there is discussion about increasing the number of households in the Yongsan railroad maintenance depot development from the existing 8,000 households, the increase is expected to be around 2,000 households at most.

The discovery of idle national and public land such as the Jamsil-Tancheon detention basin happy housing pilot district, Daechi-dong Seoul Trade Exhibition Center (SETEC), and sites of public institutions or national research institutes are small-scale lands, and local governments are showing reluctance, so it remains uncertain whether they will be included in the final measures.

Recently, the Seoul Metropolitan Government proposed the 'equity accumulation housing' where the purchase price is paid over 30 years, but this is closer to a support measure for home purchase funds for newlyweds and youth rather than a supply expansion plan.

Since the initially held equity is small, even if market prices rise significantly, large profits are unlikely, so it is expected not to gain much favor from actual demanders due to low investment value.

Moreover, the government is reportedly considering measures to force resale of equity shares to the public or to apply appraisal value rather than market price when selling, which may cause resistance from actual demanders upon system introduction.

Professor Shim Gyo-eon of Konkuk University's Department of Real Estate said, "Although the government is planning supply measures as if in an all-out war, most of the supply plans are for surrounding areas excluding major urban centers in Seoul, which are the core," adding, "Revitalizing urban reconstruction and redevelopment is the key issue, but the government has imposed too many regulations, making it difficult to ease them."

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