[Exclusive] Only 2.7% of This Year's Target Secured for 'SH Purchase-Type Rental Housing'

Target of 6,150 units this year... 169 units achieved by September
Burden of rising purchase prices for villas and others

The above photo is not related to the article. Photo by Mun Honam munonam@

[Asia Economy Reporter Kum Bo-ryeong] Seoul Housing and Communities Corporation (SH) has fallen significantly short of its target for purchasing 'acquisition-type rental housing' this year. Critics argue that the policy's intent to provide affordable and comfortable housing to non-homeowners such as university students, job seekers, vulnerable housing groups, and newlyweds is not being properly fulfilled.

According to the 'Annual Acquisition Performance of Acquisition-type Rental Housing' submitted by SH to Jeong Woo-taek, a member of the National Assembly's Public Administration and Security Committee from the People Power Party, the performance as of last month was 169 units. Considering the annual target of 6,150 units, this accounts for only 2.7%. The acquisition performance by type included 81 general units, 35 one-room units, 34 newlywed units, and 19 public jeonse units.

This contrasts with the acquisition performance over the past five years. The targets were met with 2,262 units in 2017, 2,500 units in 2018, 4,412 units in 2019, and 7,200 units in 2020, and last year, the performance was relatively strong at 60% of the 7,500-unit target.

It is analyzed that this change occurred after Kim Heon-dong took office as SH president in November last year. President Kim has expressed intentions to reduce acquisition-type rental housing and increase jeonse rentals. An SH official said, "Since actual demanders prefer apartments over villas for rental housing, acquisitions have been selectively made, and the department in charge has also issued fewer acquisition-type rental housing announcements while exploring other public rental apartments."

Financial difficulties caused by the sharp rise in real estate prices also played a role. Although national subsidies, city investment funds, and SH funds are combined, SH explained that the purchase price of newly built villas has risen significantly over the past two years, leading to financial burdens.

Moreover, there is a price ceiling on acquisitions, which prevents sellers from expecting significant profits, resulting in contracts not being finalized. An SH official stated, "There is a budget limit for purchasing houses based on appraisals, so for multi-family houses, there is a ceiling price of around 500 million KRW. Even if the appraisal exceeds that, since the acquisition announcement states that only 500 million KRW will be paid, sellers tend not to sell to SH."

Experts expressed concerns about housing insecurity among vulnerable groups. Choi Eun-young, director of the Korea Urban Research Institute, said, "Since there is no land in Seoul, it is difficult to supply other types of public rental housing, so acquisition-type rental housing is where the most vulnerable groups go. If this is reduced, the most disadvantaged people, followed by youth and newlyweds, will all face problems. Between 2010 and 2015, when housing welfare was less emphasized, the number of goshiwons increased, and this could lead to a surge in goshiwons again as a side effect."

Assemblyman Jeong emphasized, "During the five years of the Moon Jae-in administration, nationwide house prices soared, and citizens suffered greatly from the jeonse crisis. The new government and the Seoul mayor must promptly prepare fundamental measures to improve the performance of acquisition-type rental housing, which at least provides some relief in housing supply for newlyweds and youth."

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