"Inflated Supply" and "Property Rights Infringement"... The 2·4 Measures Causing Severe Issues

Government Announces Supply Plan for 830,000 Households
But Calculation Criteria Are Ambiguous... Private Sector Participation Is Key
Some of the Net Increase Will Be Used for Public Rental Housing
Land Secured Until 2025... When Will Move-in Occur?
Controversy Over 'Cash Settlement' for Purchases After the 4th

[Asia Economy Reporters Onyu Lim and Mune Won] The government’s ‘February 4 Housing Supply Plan’ is faltering amid controversies over ‘inflated supply numbers’ and ‘infringement of property rights.’ The standard used to calculate the announced supply target of 830,000 households is considered overly arbitrary, and the actual move-in date is expected to far exceed the government’s mentioned year of 2025. Industry insiders believe that it will be difficult for Seoul housing prices to immediately enter a stable downward trend due to this plan.

According to the government and real estate industry on the 8th, the main controversies surrounding the February 4 supply plan announced last week boil down to feasibility, move-in timing, and property rights infringement issues.

A representative issue is the problem of securing supply volume. The government’s supply target of 836,000 households is set for 2025. On the surface, this is an overwhelming scale compared to last year’s August 4 plan (approximately 130,000 new supply), but there are criticisms that it is difficult to regard all of this as ‘net increase’ in supply.

Analyzing the government’s announcement, out of the total 830,000 households, purely confirmed new supply from new site development, non-residential remodeling, and new purchase agreements amounts to 364,000 households. The remaining 472,000 households mostly come from redevelopment projects that demolish existing old residential areas or factory zones to build housing.

Although the government has offered incentives such as floor area ratio bonuses, the projects are structurally impossible without voluntary participation from the private sector. The government expects 3?25% participation of the total available supply volume depending on the project type, but some in Gangnam remain skeptical.

In redevelopment projects, there is also a proportion of existing housing that will be lost during the process, but the government has not specifically addressed this. Especially since a certain portion of the increased volume through new purchases and redevelopment projects is planned to be used as public rental housing, the effect is limited.

Above all, the industry views that by 2025, the government will have secured land rather than actual supply, so at least three more years will be needed before move-ins can occur. Considering that in the past, Seoul housing prices tended to pause at the time of large-scale move-ins, it seems difficult for downward pressure on Seoul housing prices to be exerted in the coming years.

The government’s ‘priority supply rights’ measure to prevent speculation may also become a stumbling block due to constitutional and practical issues. The government announced on the 4th, the day of the plan’s release, that if housing is acquired within public direct implementation redevelopment projects and urban public housing complex project zones, those buyers will be excluded from new apartment sales and will be subject to cash settlement.

For buyers looking to purchase Seoul villas and other properties, this means they must buy homes excluded from public redevelopment and reconstruction projects to avoid future cash settlements.

Such measures have a high possibility of creating innocent victims. A resident of a New Town deregulated area in Dongdaemun-gu said, “If redevelopment is carried out through public direct implementation, you cannot sell your house or move until the project is completed.”

Park Jong-deok, chairman of the public redevelopment promotion committee for Shingil 1 district in Yeongdeungpo-gu, also pointed out, “This system could potentially infringe on property rights, so cooperation from homeowners is essential, but there is no mention of this, and the government only keeps repeating its stance to increase housing supply.”

Even if the constitutional controversy is resolved, practicality remains an issue. Yang Pal-seok, head of the Rich Dad Real Estate Research Institute, explained, “Priority supply rights effectively make property appreciation impossible, so it will be difficult to gain investors’ consent.”

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