[Q&A] Byeon Chang-heum "Seoul Also Has Sufficient Housing Sites... Applying Customized Supply Plans"

Minister of Land, Infrastructure and Transport nominee Byeon Chang-heum is speaking at an online meeting with the Ministry of Land, Infrastructure and Transport press corps on the 18th. (Photo by screen capture of the video conference system)

[Asia Economy Reporter Moon Jiwon] Byun Chang-hoom, nominee for Minister of Land, Infrastructure and Transport, stated, "There are plenty of sites available for housing supply in downtown Seoul," adding, "We can sufficiently provide high-quality and affordable housing even within the city center."

He also revealed plans to dramatically increase housing supply in Seoul and the metropolitan area by supplying quality housing through public development in areas around subway stations, semi-industrial zones, and villa-dense neighborhoods.

Nominee Byun explained this vision and policy direction during an online briefing with the Ministry of Land press corps on the 18th.

He said, "Our housing policy should focus not only on quantitative supply but also on providing affordable and desirable housing within the city center," and added, "Once the move-in phase for the 300,000 housing units planned in the 3rd New Towns and the Seoul metropolitan housing supply plan begins in earnest, housing prices will surely stabilize."

Furthermore, he expressed willingness to actively introduce public owner-occupied housing, such as land leasehold housing and repurchase condition housing, which have been advocated by scholars and institutions.

Below is the Q&A with nominee Byun.

- Housing supply is concentrated in the metropolitan area, which seems like a de facto abandonment of balanced regional development. What are your thoughts on this?

▲ Unlike other regions, the metropolitan area has a low housing supply rate and concentrated demand due to population concentration, making housing prices unstable. To prevent housing instability in the metropolitan area, investments have been focused on the 3rd New Towns, metropolitan housing supply plans, and rental measures, which may worsen regional imbalance. To overcome this, I think it is appropriate to intensively supply better residential environments and better housing in local areas than in the metropolitan area. Public redevelopment and reconstruction, which started in the metropolitan area, should also begin in local areas, and where profitability is lacking, national subsidies can supplement. Housing supplied in local areas should be combined with social services, jobs, innovation spaces, and rural industries to achieve true balanced regional development. As someone who has long researched and advocated for regional balanced development, if I become minister, I will strive even more for balanced regional development.

- What overall proportion of public owner-occupied housing such as equity accumulation type, land leasehold, and repurchase condition housing do you think is necessary to influence housing market price stability?

▲ The types of housing in our market include public and private sale housing and public and private rental housing. However, sale housing is difficult to afford due to high prices, and rental housing, especially public rental housing, has strict occupancy requirements, making it hard for some groups to move in. I think various types of public owner-occupied housing are needed so that these groups can own a home with just the equivalent of a deposit. The amount of public owner-occupied housing supplied in a complex can be decided comprehensively considering the project's profitability, residents' preferences, and local government opinions.

Since capital recovery is slow for public owner-occupied housing, it is difficult to supply sufficient quantities in downtown areas lacking profitability. However, if developed at high density in downtown areas with national land or where land was acquired cheaply, profitability could improve, enabling supply. When sale housing and public owner-occupied housing are supplied in a tailored manner, housing stability can be achieved.

- Since the passage of the new Housing Lease Protection Act amendment, there has been a rental housing shortage. Minister Kim Hyun-mi said it was an 'initial transitional confusion' after the amendment and expected stabilization by early next year. However, the market sees a high possibility of prolonged rental housing shortage due to decreased move-in supply next year. What is your outlook on the timing of resolving the rental housing shortage?

▲ If I become minister, I plan to focus on utilizing sites around subway stations, factory sites, low-rise residential areas, and public institution-owned land to supply public rental housing or purchased rental housing. These types of housing do not take long to supply. For example, remodeling multi-family houses or hotels/commercial buildings can be supplied in as short as six months or up to a year. In addition to the rental housing measures announced in 2021-2022, I will proactively supply additional quantities to alleviate supply anxiety and contribute to rental housing stabilization.

- The market argues that private redevelopment and reconstruction should be revitalized. Do you have plans to ease regulations? Regarding public redevelopment, there are opinions that urban regeneration areas should be included and private participation expanded. What is your stance on this?

▲ Private redevelopment and reconstruction are systems that provide enormous benefits such as changing housing use and increasing floor area ratio. Since they greatly affect surrounding transportation and residents' lives, certain regulations are inevitable from an urban management perspective. I acknowledge the necessity of sufficiently supplying affordable housing through redevelopment projects. I am continuously considering ways to promote redevelopment and reconstruction while minimizing side effects. One factor delaying redevelopment and reconstruction is the unique urban planning and management by local governments like Seoul City. Urban planning regulations such as height restrictions act as obstacles delaying projects. If the public sector takes on roles difficult for the private sector, projects can proceed swiftly while avoiding favoritism issues arising from urban planning procedures and regulatory easing.

If I become minister, I will prepare additional incentives and develop new business models to revitalize redevelopment and reconstruction. Although urban regeneration areas were excluded from public redevelopment projects, the Ministry of Land is currently developing models linking the two. Urban regeneration-linked redevelopment projects and redevelopment-linked urban regeneration projects have been developed as actual business models. I think institutional improvements are necessary to ensure these work well in existing urban regeneration zones. To carry out redevelopment projects in urban regeneration zones, resident consent and land acquisition are required. A national consensus is needed for a system that allows land acquisition when a certain number of residents agree.

- Last month, the Kimhae New Airport Verification Committee under the Prime Minister's Office concluded that 'fundamental review is necessary' for the Kimhae New Airport plan, and the political circle is treating the cancellation of the Kimhae New Airport as a fait accompli. How do you plan to conclude this issue?

▲ Since being nominated as minister, many institutions and experts have expressed both concerns and expectations regarding Kimhae New Airport and other airports. I have been thinking a lot about this and listening to opinions. I understand the Ministry of Land is carefully reviewing the Prime Minister's Office verification report. If I become minister, I will thoroughly examine this and promptly prepare follow-up plans.

- The current median price of apartments in Seoul is 1 billion KRW. Do you consider this appropriate? Also, what do you see as the appropriate annual supply volume of apartments in Seoul?

▲ That is a difficult question. According to the OECD standard, an appropriate housing price should not exceed five times the annual income, but current housing prices in Seoul far exceed this. I think housing cheaper than the current market housing should be supplied to stabilize prices. However, housing price increases are also due to demographic changes. Household changes have been around 20,000 to 30,000 households in recent years but increased by 62,000 last year. Considering household changes, more stable supply is needed to prevent signals of housing supply instability from appearing on the ground. If I become minister, I will first review housing statistics to determine what types of housing and at what prices need to be supplied. I will examine not only the number of houses but also the number of rooms, size, and types through detailed statistics and implement government policies accordingly. Policy decisions start with accurate information and statistics, so I will discuss with experts, public institutions, Statistics Korea, the Korea Research Institute for Human Settlements, and the Korea Appraisal Board to disclose objective figures and take necessary measures.

- Yesterday (the 17th), the designated regulated areas were expanded. How effective do you think current regulations are? Also, if you become minister, would you recommend interest rate hikes to stabilize the real estate market?

▲ There has been a global low-interest rate trend from the start, and ultra-low interest rate policies were implemented in response to COVID-19, flooding liquidity into the housing market and causing instability. This phenomenon occurred not only in Korea but also in the US, Canada, France, Australia, and other countries. Liquidity flows into real estate and asset markets because expected returns are high. To lower this and prevent additional liquidity inflows, the regulated area system operates as part of demand management policies. Regarding interest rate decisions, macro conditions due to COVID-19 exist alongside asset markets, so monetary authorities must make comprehensive judgments. From the Ministry of Land's perspective managing asset markets, I will accurately convey market anxieties so monetary authorities can consider them when making decisions.

- If the entire country is designated as a regulated area, there could be a vicious cycle of rising housing prices in the metropolitan area. How effective do you think this is?

▲ In local areas, speculative demand from outsiders buying houses en masse causes significant harm to local residents. Therefore, this designation of regulated areas was inevitable. In the metropolitan area, efforts are underway to block speculative demand inflows through designation as adjusted target areas or speculative overheating districts, and regulations and tax measures on multi-homeowners are also applied. Contrary to concerns, I think new investment demand inflows are limited under the current system in the metropolitan area. If I become minister, I will restore housing market stability through affordable and stable housing supply.

- You mentioned plans to expand housing supply by easing regulations in areas around subway stations, semi-industrial zones, and low-rise villa-dense areas. What are the specific methods?

▲ Areas around subway stations, low-rise residential areas, and semi-industrial zones vary in land use status, urban planning content, and ownership characteristics by region, so tailored supply plans are needed rather than a uniform project. Even among old residential areas, some are suitable for small-scale housing maintenance projects or public remodeling, while others are better suited for redevelopment, residential environment improvement projects, or street housing maintenance projects in combination.

- These projects will generate relocation demand, which will inevitably increase if public redevelopment and reconstruction proceed. How do you plan to respond to this relocation demand amid the severe rental housing shortage?

▲ For large-scale maintenance projects, it is necessary to create separate relocation complexes to respond to relocation demand. For example, LH created a complex of 4,650 households during the circular redevelopment in Seongnam City. If relocation demand is high, it can be met using the 3rd New Towns and others. For small-scale projects, national land, building purchase, and remodeling in the project site or nearby areas can be utilized. We will manage supply and demand by adjusting relocation demand and proceed with projects considering regional project status.

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