114,000 Rental Housing Units to Be Released Over 2 Years, 'Remodeling Vacant Shops and Hotels'

Government to Announce Support Measures for Housing Stability of Low- and Middle-Income Groups on the 19th
Utilizing Vacant Public Rental Units for Jeonse Conversion
"This Measure Will Resolve Supply Shortages Over the Next Two Years"

Minister of Land, Infrastructure and Transport Kim Hyun-mi is attending the '10th Real Estate Market Inspection Meeting of Related Ministers' held at the Government Seoul Office in Jongno-gu, Seoul on the 19th. Photo by Kang Jin-hyung aymsdream@

[Sejong=Asia Economy Reporters Kim Hyunjung, Jang Sehee, Moon Jewon] The government announced a housing stability plan to change the supply method of vacant rental housing and convert empty commercial spaces or hotels to release '114,000 rental units' by 2022. However, considering the location and type of related housing, there are criticisms that the demand was not properly considered, making it effectively a 'fictitious supply.'

Hong Namki, Deputy Prime Minister and Minister of Economy and Finance, chaired the '10th Real Estate Market Inspection Meeting of Related Ministers' at the Seoul Government Complex in Gwanghwamun on the morning of the 19th and said, "We will supply 114,000 rental housing units nationwide over the next two years, including 70,000 units in the metropolitan area and 35,000 units in Seoul." The related rental housing will be supplied by net increase methods that increase the total stock, such as purchase agreements, newly built purchase rentals, and public jeonse-type housing.

The 114,000 units proposed by the government are divided into ▲utilization of public rental housing vacant for more than three months (39,100 units) ▲public jeonse housing (18,000 units) ▲newly built purchase agreements (44,000 units) ▲remodeling of vacant non-residential spaces such as commercial buildings, offices, and lodging facilities (hotels) (13,000 units). In particular, the focus was on 'rapid supply.' To address the immediate jeonse shortage, the plan is to concentrate on supplying 49,000 units nationwide, including 24,000 units in the metropolitan area, which is more than 40% of the total supply volume, by the first half of next year, and release the rest to the market by next year. This approach differs from previous measures announced in the 5th, 6th, and 8.4 measures, which targeted supply available after 2023.

On the 19th, when the government announced its 24th real estate policy, a poster criticizing the government's real estate policy was posted at a real estate agency in Songpa-gu, Seoul. Photo by Moon Honam munonam@

The government expects this plan to calm the recent jeonse supply and demand instability. Deputy Prime Minister Hong explained, "With this measure, the nationwide supply volume (based on completion) in 2021 and 2022 will be at the same level as usual," adding, "The previously feared shortage of supply over the next two years will be resolved."

They also proposed 'high-quality medium-sized housing (exclusive area 60~85㎡)' to accommodate the middle class. The plan includes extending the public rental residence period to 30 years and expanding the eligibility criteria for median income from the current 130% to 150%, aiming to release 65,000 units over five years. Deputy Prime Minister Hong emphasized, "This measure focuses on expanding short-term supply capacity rather than suppressing demand to meet actual jeonse demand, and aims to enhance the role and status of public rental housing."

However, there are criticisms that the government only made a superficial announcement under time pressure without properly considering demand. Especially, vacant commercial facilities are difficult to consider good residential spaces given their structure and location, and remodeling for security, heating and cooling, and parking facilities may require considerable time and cost. Professor Kwon Daejung of Myongji University’s Department of Real Estate explained, "(The government’s measure) is a desperate action taken as a last resort," adding, "Supply and demand instability will be resolved naturally only when items are released to the market through measures such as easing capital gains tax."

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