Different Thoughts but Same Goal... Government and Oh Se-hoon, Is Compromise Possible?

Oh Se-hoon "Deregulation"... Possible Conflict with Government
However, Pledge Implementation Impossible Without Government Cooperation
Government Also Needs Seoul City's Cooperation for Public Development

Mayor Oh Se-hoon, elected as the 38th Mayor of Seoul, is expressing his thoughts as he arrives at Seoul City Hall on the morning of the 8th. [Image source=Yonhap News]

[Asia Economy Reporter Moon Jiwon] Interest is focused on what kind of relationship Seoul Mayor Oh Se-hoon, who showed a negative stance on various government real estate policies during the election process, will maintain with the government regarding reconstruction and redevelopment regulations, official price increases, and more. Although Mayor Oh advocates for private-led housing supply and deregulation, it is analyzed that he will strive to find a compromise point since achieving all of these goals is difficult without government cooperation.

According to the real estate industry on the 10th, Mayor Oh has set a goal to supply 360,000 housing units over the next five years, with more than half, 185,000 units, to be developed through private development methods. This is the exact opposite of the current government's direction, which focuses on housing supply through public development rather than private-led redevelopment and reconstruction.

During the election process, Mayor Oh pledged to ease redevelopment and reconstruction-related regulations such as the 35-floor rule, floor area ratio limits, the price ceiling system for pre-sale, and the reconstruction excess profit recovery system. Because of this, after Mayor Oh was elected, development expectations have risen in areas like Apgujeong-dong, Gaepo-dong, Yeouido, Mok-dong, and Sanggye-dong, which had been suppressed by reconstruction regulations, leading to an increase in asking prices.

However, many analyses inside and outside the government suggest that it will be difficult for Mayor Oh to fulfill his pledges alone. Among the 109 Seoul city council members, 101 belong to the Democratic Party of Korea, and among the 25 district mayors in Seoul, 24 are from the same party. The National Assembly, which holds legislative power, is also effectively controlled by the ruling party. It is difficult to push forward easing the 35-floor rule, floor area ratio relaxation, and safety inspection regulation without government cooperation.

Therefore, it is analyzed that Mayor Oh will try to find some compromise with the government. Mayor Oh needs to produce concrete results during his remaining term of just over a year, and since the government also requires Seoul City's help to stably promote public development in downtown Seoul as outlined in the 2·4 measures, there is room for compromise on both sides.

From Mayor Oh's perspective, focusing excessively on deregulation of the private sector could cause Seoul housing prices to surge rapidly in the short term, potentially backfiring. It is expected that the government will seek Seoul City's assistance for the supply of 320,000 housing units in downtown Seoul proposed in the 2·4 measures, and Mayor Oh may negotiate a 'deal' to push for some regulatory easing in return.

In fact, on the 8th, Deputy Prime Minister for Economy Hong Nam-ki said at the Real Estate Market Inspection Ministerial Meeting, "Housing supply cannot be done solely by the central government, metropolitan local governments, or basic local governments in the administrative procedures such as candidate site selection, district designation, review, and permits." Although this was aimed at Mayor Oh's housing supply plan, it can also be interpreted as meaning that both the government and Seoul City share the goal of 'housing price stabilization' and thus need to cooperate.

Mayor Oh also expressed willingness to compromise with the government regarding official price increases. After inspecting the Seoul Station COVID-19 temporary screening clinic that day, he told reporters, "Seoul City does not have the authority to adjust the increased official prices, but I want to believe that through consultation with the central government, it is possible to negotiate so that the prices do not continue to rise at a rapid pace."

However, since Mayor Oh was elected on the back of angry real estate public sentiment and there is a significant difference in stance with the government regarding regulations, conflicts may arise frequently in the future. Mayor Oh emphasized regarding official price increases, "I believe Seoul City needs to clearly state its position, and from that perspective, we have raised the issue and started reviewing it."

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