Revitalizing Remodeling in First-Generation New Towns: Supply Measures Remain 'Questionable'

Apartment views in the Seodaemun-gu and Mapo-gu areas of Seoul

In the real estate policy plan announced by the government and ruling party on the 27th, the activation of remodeling in the first-generation new towns in the Seoul metropolitan area was mentioned as part of additional supply measures, drawing attention to specific plans. However, since the market still perceives remodeling as less profitable compared to reconstruction, it is expected that the effect will be minimal unless concrete and radical incentives are presented.

According to the Democratic Party's "Supply, Finance, and Tax Improvement Plan for Housing Market Stabilization" on the 28th, the government and ruling party proposed supplying 10,000 housing units for youth and newlyweds on sites suggested by local governments, and also presented the activation of remodeling projects in first-generation new towns such as Bundang and Ilsan as a measure to expand supply.

In the case of first-generation new towns, out of the initial supply of about 290,000 households, approximately 280,000 are apartments or other multi-family housing. Starting with about 5,000 units in Bundang this year, most of the 280,000 households will meet the reconstruction eligibility period (30 years) by 2026, indicating significant aging.

However, in the market, the existing floor area ratio is high at 160-220%, making reconstruction realistically difficult. For this reason, residents of first-generation new towns are generally welcoming this plan. A representative from a real estate agency in Ilsan New Town said, "There was an atmosphere of at least doing remodeling by looking at cases like Bundang, and (with this plan) residents' expectations are likely to grow even more."

Nevertheless, evaluations that remodeling cannot be a meaningful supply expansion policy continue. Seo Jin-hyung, president of the Korea Real Estate Society (professor at Gyeongin Women's University), said, "While remodeling can be expected to improve the residential environment and quality of life, the effect on increasing the number of households is extremely minimal."

Moreover, regulatory relaxation measures related to the biggest challenges of remodeling projects, such as the demolition of load-bearing walls and permission for vertical extension, were not announced this time. This has raised concerns that ambiguous policy signals may only stimulate housing prices in first-generation new towns.

Meanwhile, there are also criticisms regarding the plan to discover land supply project sites in places such as relocated military airports within urban areas, reservoirs that have lost their agricultural water supply function, reserve forces training grounds, and correctional facilities. It is said that this is merely a measure to appease public sentiment without consultations with local governments on specific candidate sites.

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