Burden of Speculation Eradication and Recurrence Prevention... Shrinking New Housing Sites

17,000 Housing Units to be Supplied in Seoul Geumcheon, Gyeonggi Seongnam, Incheon Bupyeong, and Others
13,000 Additional Units in Sejong City... Government "Thorough Investigation of Speculated Speculation Areas"

[Asia Economy Reporter Kangwook Cho] On the 29th, the government announced a housing supply plan totaling 52,000 households. Excluding the urban regeneration leading project candidate sites (21,000 households) and additional supply in the Administrative City Complex (13,000 households) from the existing 2·4 measures, the newly promoted public housing sites are limited to two small- to medium-sized local sites, Seonbawi in Ulsan and Sangseo in Daejeon, with only 18,000 households. This figure is significantly reduced compared to the initially planned announcement of about 150,000 new housing sites. Since the first new housing site announcement on February 24, the aftermath of the Korea Land and Housing Corporation (LH) speculation scandal has made real estate issues a political flashpoint, which is interpreted as the government bearing the burden of measures to eradicate speculation and prevent recurrence. In fact, prior investigations before the announcement reportedly detected abnormal trends in land transactions at candidate sites.

◆ Supply of 21,000 households in 27 locations including Geumcheon in Seoul and Seongnam in Gyeonggi = About 17,000 households will be supplied in 20 small-scale housing maintenance management areas selected in Geumcheon, Yangcheon, Jongno, Jung-gu, Seongdong, Jungnang, Gangseo in Seoul; Seongnam, Suwon, Dongducheon in Gyeonggi; Bupyeong in Incheon; Dong-gu in Daejeon; and Buk-gu in Gwangju. According to the Ministry of Land, Infrastructure and Transport’s analysis of the effects of street housing maintenance projects promoted in major candidate sites, the number of supplied units increased by an average of 1.6 times compared to private projects before the designation of management areas, and the proportional rate, an indicator of project feasibility, improved by up to 35 percentage points to an average of 119%.

In seven residential regeneration innovation districts including Guro-gu in Seoul; Suwon and Anyang in Gyeonggi; Michuhol-gu and Seo-gu in Incheon; and Daedeok-gu and Dong-gu in Daejeon, 3,700 new housing units will be supplied along with public welfare facilities such as public parking lots, libraries, and daycare centers. The Ministry explained that the floor area ratio is expected to increase by an average of 76 percentage points, resulting in an average 1.3 times increase in supply units. Additionally, the priority supply sale price is analyzed to be about 69.8% of market price, improving landowners’ profit rates by an average of 13.8 percentage points compared to private development.

◆ Additional 13,000 households in Sejong City, the ‘No.1 in house price increase rate’ = In Sejong City, which ranked first nationwide in house price increase last year, an additional 13,000 housing units will be supplied across five living zones through high-density development, floor area ratio increases, and additional acquisition of residential land, including 9,200 units for sale and 3,800 rental units. About 1,200 units will be secured by raising the floor area ratio, and approximately 10,300 units will be additionally secured by changing commercial land and other uses to residential land. Furthermore, about 1,500 units will be added through high-density development of commercial land into mixed-use complexes.

◆ Supply of 18,000 households in new local housing sites such as Ulsan Seonbawi and Daejeon Sangseo = The Ulsan Seonbawi district, designated as a new local housing site, is adjacent to the Donghae Expressway and National Road No. 24, offering favorable transportation conditions, and will supply 15,000 households on a 1.83 million square meter scale. Additionally, a 420,000 square meter park and green space (23% of the total area) will be created to harmonize with the surrounding ecological environment including Taehwagang River, Muhaksan Mountain, and Seonbawi Park, establishing a nature-friendly residential environment.

The Daejeon Sangseo district is a small-scale housing site of 260,000 square meters near the Gyeongbu Expressway Sintanjin IC, where 3,000 housing units will be supplied. A high-quality residential complex close to workplaces will be developed for workers in nearby Daedeok Industrial Complex and Pyeongchon Small and Medium Enterprise Complex.

◆ "Speculation suspicions found in preliminary investigation"… Second new housing site announcement including 110,000 households in the metropolitan area postponed to second half = The second new housing site announcement, including 110,000 households in the metropolitan area that attracted attention, has been postponed to the second half of the year. This is because the preliminary investigation of candidate sites capable of supplying the remaining 150,000 households from the 2·4 measures’ plan to supply 250,000 new public housing units confirmed some speculation possibilities.

According to the Ministry of Land, preliminary investigation results showed that in some candidate sites, the average monthly transaction volume over half-year or quarter periods increased 2 to 4 times compared to the average monthly transaction volume over the past five years in the area. Cases were found where non-local transactions accounted for half of all transactions. In some candidate sites, the proportion of share transactions in total transactions rose to over 80% at certain times, exceeding the city/province average share transaction ratio. Some candidate sites also showed land price change rates more than 1.5 times higher than neighboring areas, indicating concentrated investment sentiment and demand. However, the Ministry reported that no suspected speculation cases were found among Ministry and LH employees owning land in candidate sites.

A Ministry official said, "Given that some speculation possibilities were confirmed in candidate sites, we judged that thorough investigation to detect illegal speculative activities should precede a prompt announcement," adding, "Based on transaction trend investigation results, we will request police investigations focusing on remaining candidate sites other than the two announced this time, and the Real Estate Transaction Analysis Planning Team will start a detailed investigation of actual transactions."

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