[Q&A] Noh Hyung-wook: "3rd New Town Preliminary Subscription Volume at 60~80% of Market Price"

"Possibility of House Price Decline in 2-3 Years... Be Cautious with Yeongkkeul"
"Total Housing Supply Not Small but Market Demand-Supply Mismatch"

[Asia Economy Reporter Kangwook Cho] On the 5th, at a press conference held at the Government Sejong Convention Center in Sejong City, Roh Hyung-wook, Minister of Land, Infrastructure and Transport, announced plans to supply the pre-sale units of the 3rd New Town at 60-80% of the surrounding market prices to stabilize housing prices in the metropolitan area.

In particular, he diagnosed that the current housing prices are overheated due to abundant liquidity supply and warned that there is a possibility of a sharp market decline in 2 to 3 years. He urged caution against reckless gap investment and 'all-in' housing purchases.

Below is a Q&A with Minister Roh.

- Both jeonse (lease deposit) and sales prices are expected to rise in the second half of this year. How do you analyze the causes?

▲ The recent market instability is due to persistent risk factors such as ultra-low interest rates and abundant liquidity, combined with various deregulations and expectations for development projects, which have expanded the expectation of rising housing prices.

Jeonse prices showed stability but have rebounded, so we are monitoring closely. The jeonse market is thought to be affected by localized and temporary supply-demand imbalances, such as increased relocation demand from large-scale reconstruction complexes in the four Gangnam districts of Seoul and pre-sale waiting demand.

Overall, jeonse supply is at a similar level to before, so supply-demand issues in the second half should be resolved. We announced jeonse measures at the end of last year, including new construction purchase agreements, which will add to previously announced measures. If supply measures, speculative prevention measures, Financial Services Commission household debt management, and Bank of Korea interest rate hikes are implemented simultaneously, I believe they will contribute to stabilizing housing prices.

- Are there plans to introduce additional measures to stabilize housing prices?

▲ We plan to discuss measures with relevant ministries to prevent concentrated gap investment and chasing purchases driven by development expectations. Since dispelling concerns about supply shortages is the top priority, we will steadily implement supply measures such as the 2·4 measures and last November's jeonse measures, while exploring ways to expedite housing supply as much as possible.

We will also expedite institutionalization of measures such as early restrictions on the transfer of cooperative member status announced jointly with Seoul City, and if necessary, cooperate with local governments to conduct actual transaction investigations. Additionally, we are reviewing ways to enhance the effectiveness of land transaction permit zones, which allow real estate purchases only for actual residence or business purposes.

There were criticisms that some speculative demand flowed in due to the delay in the classification date for cash settlement in the urban public housing complex development project from February 5 to the date of the National Assembly's passage of follow-up bills such as the Public Housing Special Act. We plan to closely monitor speculation during the project implementation process.

Pre-sale for the 3rd New Town will begin on the 15th of this month, starting from Gyeyang, Incheon. For ordinary citizens dreaming of homeownership, the sale price is set at 60-80% of the surrounding market prices. Specifically, in Gyeyang, Incheon, 59㎡ housing will be supplied at 350 million KRW, and 74㎡ at 450 million KRW; in Jinjeop, Namyangju, 59㎡ at 350 million KRW, and 74㎡ at 400 million KRW; in Bokjeong, Seongnam, 51㎡ at 600 million KRW, and 59㎡ at 700 million KRW; in Cheonggye 2, Uiwang, 55㎡ at 500 million KRW; and in Wirye Newlywed Hope Town, 55㎡ at 590 million KRW.

- Many in the political sphere believe that if the 2·4 measures are implemented without fail, housing prices will fall. If someone has purchased many houses by going 'all-in' and later faces issues such as a rapid increase in household debt, what measures are in place?

▶ Globally, asset bubbles are likely to normalize soon. Whether this happens quickly or in 2-3 years is uncertain, but if you buy now by going all-in, you may face difficulties if asset prices readjust when you sell later. If you invest recklessly, you must take responsibility for your investment. The pre-sale prices for new towns are at 60-70% of market prices. Urban public housing plans include 72,000 units across 52 districts. Observing these project plans is also a method.

Even though many are currently purchasing houses recklessly, housing prices may fall in 2-3 years. If you take out excessive loans and go all-in, you may face difficulties when asset prices readjust at the time of sale. I want to advise caution in investment.

- Are there ongoing discussions with Seoul City regarding support measures for private redevelopment projects? Is there any intention to ease reconstruction regulations to increase housing supply?

▲ Both the Ministry of Land, Infrastructure and Transport and Seoul City agree that housing market stability is a prerequisite for promoting private redevelopment projects. On the 9th of last month, we agreed to jointly promote market stabilization measures such as early restrictions on the transfer of cooperative member status, and related bills have been proposed. We will promptly proceed with related law amendments, continuously monitor market trends, and discuss additional necessary measures or support plans.

- There are criticisms that policies such as the three lease laws and the abolition of rental business operators have partly caused instability in the jeonse market. Do you agree, and are there any solutions under discussion?

▲ The three lease laws caused some initial confusion during the process of establishing new market practices after their introduction. The rise in jeonse prices since the second half of last year is judged to be due to a combination of abundant liquidity from ultra-low interest rates, an increase in the number of households due to household segmentation, and confusion caused by the new system.

As new transaction practices settle, the number of listings is gradually recovering, and there is a positive effect of increased contract renewal rates among existing tenants after the introduction of the three lease laws. We will continue efforts for the stable settlement of the three lease laws and continuously monitor the jeonse market trends.

- The Ministry of Economy and Finance mentioned housing supply plans through the relocation of public institutions in the metropolitan area. Are there any candidate sites?

▲ The relocation of public institutions in Seoul and the metropolitan area mentioned by the Ministry of Economy and Finance does not mean relocation to innovation cities. Among the urban public housing complex project sites proposed by various local governments, there are sites currently used by public institutions, which is what they referred to. Most of these sites are not idle land but in use, and if the public institutions using these sites relocate elsewhere, additional housing supply can be made through urban projects.

- Among the 52 candidate sites for urban public housing complex projects, only two in Busan and two in Daegu are outside the metropolitan area, leading to criticism that the project is concentrated in the metropolitan area for regional balance.

▲ There is a tendency for leading project candidate sites to be selected mainly in Seoul, where candidate site proposals are relatively active. We are continuously discovering additional leading project candidate sites and plan to announce candidate sites in large cities outside the metropolitan area in the future.

- While balanced development is important, resolving imbalances within the metropolitan area is also necessary. Some 2nd New Towns seem to have quite poor metropolitan transportation measures. How do you plan to address this?

▲ We will continuously inspect and manage delayed projects and transportation inconveniences to ensure that planned transportation facilities in the 2nd New Towns proceed normally. For existing sites such as Dongtan 2 District in Hwaseong and other 2nd New Towns, if necessary, we will designate special measures zones and announce metropolitan transportation improvement measures comparable to those in Gimpo and Geomdan New Towns.

- You recently revealed plans for three-dimensional development of the Gyeongbu Expressway section from Dongtan to Gangnam. What are the specifics?

▲ The approximately 30 km section of the Gyeongbu Expressway from Dongtan to Gangnam is chronically congested, and there is a need to expand road capacity. We are reviewing a three-dimensional expansion plan that maintains the existing surface road and constructs an underground road beneath it. Since no development costs or land compensation costs are incurred on the surface, the project cost is expected to be around 3 trillion KRW.

- Is there room to revise supply plans such as the Taereung Golf Course, similar to the Gwacheon Government Complex?

▶ In Gwacheon, while searching for alternative sites, we secured more units than the original plan of 4,000 households. The Taereung Golf Course plan was delayed due to the recall issue of the district mayor, but since the recall has ended, we have started consultations with Seoul City and the district office. Although the media reports that Seoul City opposes it, the tone is different. We plan to consult sufficiently. Like Gwacheon, if the supply volume needs to be reduced, we will secure alternative sites to adjust the overall supply volume.

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