Noh Hyung-wook: "Housing Prices Will Clearly Decline... 460,000 Units to Be Supplied Next Year"

Ministry of Land and Ministry of Economy Announce Next Year's Government Work Plans
Minister Noh: "We Will Definitely Achieve Stability in the Real Estate Market"
390,000 Housing Units for Sale Next Year, 70,000 Pre-Subscription Units

Minister of Land, Infrastructure and Transport Noh Hyung-wook is delivering a greeting at the full meeting of the Land, Infrastructure and Transport Committee held at the National Assembly in Yeouido, Seoul, on the 27th. [Image source=Yonhap News]

On the 27th, Noh Hyung-wook, Minister of Land, Infrastructure and Transport, stated, "The trend of a gradual decline in the housing market will become more apparent," and added, "We will steadfastly complete the key tasks for next year, including housing supply, to ensure stability in the real estate market."

During the 2022 government work plan presentation held at the Government Seoul Office, Minister Noh said, "Recently, the housing market has entered a stabilization phase due to expanded housing supply, stringent household debt management, and interest rate hikes."

According to the Ministry of Land, Infrastructure and Transport, the nationwide housing price increase rate has sharply slowed down as the rate of increase in the metropolitan area has narrowed for 14 consecutive weeks and in Seoul for 17 consecutive weeks. The areas experiencing housing price declines are gradually expanding from local regions and the metropolitan area to some parts of Seoul. Buyer sentiment has shrunk to less than half compared to August, and transaction volumes are at their lowest since the 2008 financial crisis.

The jeonse (long-term lease) market is also seeing a decrease in the rate of increase. Jeonse listings have increased by 80% compared to the end of last year, and the phenomenon of falling new jeonse prices is spreading from the metropolitan area to Seoul.

Minister Noh explained that under these circumstances, the trend of a gradual decline in the housing market is expected to become more distinct.

He emphasized, "On the supply side, the plan to supply 2.05 million housing units is progressing without setbacks, and on the monetary and financial side, the U.S. Federal Reserve has indicated more than seven interest rate hikes through 2023, signaling the start of a global deleveraging cycle. Our financial authorities are also strengthening household loan management."

He further stated that next year, five key tasks will be set and completed without wavering to stabilize the market: ▲ accelerating housing supply speed ▲ expanding mid- to long-term supply infrastructure ▲ strengthening liquidity management in the housing market ▲ establishing a fair and transparent real estate market order ▲ and shifting the paradigm of housing welfare.

Minister Noh said, "Among the 32,000 public pre-sale units, more than 40% will be allocated to the 3rd New Town projects, and among the 38,000 private units, 4,000 units in downtown Seoul will be included, focusing supply on highly preferred areas. Adding the 70,000 pre-sale units to the 390,000 units scheduled for sale next year, a total of 460,000 units will be supplied next year."

This is more than 100,000 units above the average annual supply over the past 10 years, and the Ministry of Land, Infrastructure and Transport expects it to effectively absorb existing demand.

In particular, Minister Noh explained that the speed of private redevelopment and reconstruction, which has been sluggish due to strengthened real estate regulations, will be increased and project feasibility will be improved. He said, "We will simplify procedures related to redevelopment projects through the introduction of integrated reviews and support smooth project progress by enhancing project feasibility, such as expanding areas eligible for floor area ratio incentives."

He also emphasized that by faithfully implementing the previously announced plan to supply 2.05 million housing units, overwhelming supply will be realized to establish a mid- to long-term market stabilization foundation. Accordingly, the Ministry plans to complete the designation of districts for 430,000 housing supply candidate sites next year, confirming supply locations for 1.64 million units, which is 80% of the 2.05 million unit supply plan. Among the 430,000 units, about 200,000 units will be designated in public land sites in the metropolitan area, which is more than five times the average annual metropolitan land supply of 37,000 units over the past 10 years.

Furthermore, the government explained that the borrower-based total debt service ratio (DSR) regulation will be expanded early from January next year, and through measures such as expanding installment repayment and fixed-rate loan ratios and introducing countercyclical capital buffers for the household sector, the qualitative structure of household loans will also be improved.

Additionally, the government will continuously investigate and strictly punish illicit and illegal speculative activities such as high-priced housing purchases by minors and low-priced housing purchases by corporations and non-residents. Minister Noh said, "The government is making multifaceted efforts to realize housing stability for the public while firmly maintaining policy direction," and added, "We will concentrate all capabilities to ensure stability in the real estate market so that people can worry less about housing prices."

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