The Roh Tae-woo Government's '2 Million Housing Units Construction' Was Effective... Will It Control House Prices This Time Too?

127 Million Housing Units Supplied in Seoul Metropolitan Area + 2·4 Supply Measures
Supply Reaches 2 Million Households... Largest Scale Ever
2 Million Households Supplied During Roh Tae-woo Administration
Similar to 80s-90s Situation... Increased Liquidity
House Price Stabilization Effect Then... What About This Time?

[Asia Economy Reporter Moon Jiwon] With the addition of the 830,000-unit "2·4 Supply Plan" to the existing "1.27 million housing units supply plan for the metropolitan area," the total housing supply volume under the current government has become a record-breaking scale comparable to the "2 million housing units construction plan" during the Roh Tae-woo administration, when housing was in absolute shortage.

During the Roh Tae-woo administration, the large-scale supply offensive including new towns stabilized housing prices for nearly 10 years, raising expectations that this new plan could also curb soaring housing prices. However, some concerns remain that unlike in the past, this may end up as mere "false hope," as private sector participation in public redevelopment projects is uncertain and plans for new land supply are still undecided.

According to the government and industry on the 5th, the Ministry of Land, Infrastructure and Transport announced a plan to supply a total of 836,000 housing units nationwide, including 323,000 units in Seoul by 2025. Combined with the currently underway 1.27 million housing units supply plan for the metropolitan area through the 3rd new towns, the total volume exceeds 2 million units. In terms of volume alone, this is the "largest scale ever," comparable to the 2 million housing units supply plan of the Roh Tae-woo administration.

There are many similarities between this supply plan and that of the Roh Tae-woo administration. In the 1980s, around the time Roh Tae-woo took office, the "three lows" boom (low dollar, low interest rates, low oil prices) greatly increased liquidity in the market, overheating the real estate market and stock market. As housing prices skyrocketed and public opinion worsened mainly in Seoul, Roh announced a plan in 1989 to supply 2 million housing units, including five new towns such as Bundang and Ilsan.

Just as the Moon Jae-in administration aimed to stabilize housing prices through five 3rd new towns adjacent to Seoul, such as Hanam and Wangsuk, the 1st new towns were the main projects at that time. Roh also planned to build 250,000 permanent rental housing units and implemented strong speculative suppression measures such as the three land public concept laws (land ownership cap system, development profit recovery system, and land excess profit tax). Like the current government, he operated a combination of policies to curb speculative demand and expand supply.

Despite controversies such as poor construction quality, lack of infrastructure, and population concentration in the metropolitan area, the Roh Tae-woo administration's supply plan had a significant impact on stabilizing housing prices from 1991. Many experts at the time evaluated that Bundang controlled Gangnam housing prices for over 10 years, and the Ministry of Construction and Transportation explained in 2002 that "housing prices reversed to a downward trend starting in 1991, when housing supply began."

However, opinions differ somewhat on the success of this new plan. Although the government revealed the policy direction yesterday, specific supply areas and details have not yet been disclosed, making it difficult to fully trust its feasibility.

It is also uncertain how much the private sector will participate in the public direct implementation redevelopment projects, which account for 136,000 units. Although the government has promised exceptional benefits such as exemption from the reconstruction excess profit recovery, some major Gangnam reconstruction complexes are already saying it is "not attractive."

Excluding the 260,000 units supplied through land supply, most of the plan depends on the government's hope for "active private participation." The government has not yet contacted residents in specific areas. Of course, since the housing supply rate and household composition differ between the 1990s and now, it is difficult to simply compare the two policies.

Yoon Sung-won, 1st Vice Minister of the Ministry of Land, Infrastructure and Transport, appeared on a radio broadcast that day and expressed confidence, saying, "Increasing supply in urban areas as much as possible is the fastest way to stabilize housing prices," and "We are receiving many inquiries regarding public direct implementation redevelopment projects." He added, "We have selected 222 sites in Seoul for public direct implementation redevelopment projects or urban public housing complex projects and plan to hold resident briefings after the Lunar New Year holiday."

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