"Comprehensive Supply Plans... Government's Will Stands Out but Questions Remain on the Need for GB Release"

[8·8 Supply Measures] Real Estate Experts' Opinions
Doubt on Market Stabilization Effect of Greenbelt Release
Non-Apartment Units May Provide Short-Term Supply Effect
Legislative Amendments on Redevelopment Projects Pose Variables for National Assembly

"We could glimpse the government's willingness to supply housing."

Experts evaluated the ‘Plan to Expand Housing Supply for National Residential Stability’ announced by the government on the 8th in this way. While the policy direction was considered successful in presenting the government's stance, opinions differed regarding the effectiveness of detailed policies. In particular, the plan to supply housing on sites where the Greenbelt (GB, Development Restriction Zone) is lifted raised doubts about its market stabilization effect. The government proposed this plan citing the possibility of shortening the time required for land compensation and other processes, but it is far from stabilizing the current market.

Lee Eun-hyung, a research fellow at the Korea Construction Policy Research Institute, said, "Eventually, the Greenbelt in the Gangnam area will be lifted, but the key is how much supply is possible and whether it can bring market stabilization effects," adding, "Based on experience, I think it will not be easy."

Kim Hyo-sun, senior real estate research fellow at NH Nonghyup Bank, also pointed out, "Seoul's green space per capita is 24.79㎡, which is less than 10% of the national average (266.01㎡), indicating a severe shortage," and added, "This does not align with the purpose of preserving it for future generations. It is better to focus on the new towns planned so far."

There was also a view that lifting the Greenbelt itself reflects the government's willingness to supply housing. Yoon Ji-hae, senior researcher at Real Estate R114, said, "Private sector participation is important, and the government needs to persuade the market," but added, "Although the private land price ceiling system is criticized for causing so-called 'lottery sales,' it has symbolic significance. Similarly, lifting the Greenbelt also has meaning in showing that the government is making efforts to supply housing."

Regarding the plan to stabilize the market through normalization of non-apartment supply, it was expected to serve as an additional supply source. Ham Young-jin, head of the real estate research lab at Woori Bank, diagnosed, "Compared to apartments, the construction period is shorter, so it can produce visible short-term supply effects, and it can be expected to serve as an additional supply source in the urban non-apartment rental market, which usually has considerable transaction volume."

Senior research fellow Kim Hyo-sun also evaluated, "Expanding the purchase-type new rental housing until the non-apartment supply situation normalizes seems both feasible and effective," adding, "If it proceeds with a sense of speed, it could contribute to stabilizing the rental market, which is one of the main causes of recent buying trends."

On the other hand, research fellow Lee Eun-hyung said, "In a situation where social perception and preference are clearly concentrated on apartments, I am not sure if it is right for the public sector to intervene under the name of 'normalization'." He judged that it is a matter that should be left to the market rather than artificial intervention. He further analyzed, "Tax benefits for buyers of newly built small houses are not sufficient considering the constraints such as registration as rental business operators."

A residential area densely populated with apartments, multi-family houses, and villas in the Dongseon and Donam-dong areas of Seongbuk-gu, Seoul / Photo by Yonhap News

The National Assembly, where the opposition holds a majority, was cited as the biggest variable for this policy. The day before, the government said it would simplify the procedures for redevelopment projects to speed up the process. It announced plans to enact the ‘Act on Promotion of Reconstruction and Redevelopment (Special Act)’ and to persuade the National Assembly to abolish the re-levy tax.

Senior researcher Yoon Ji-hae said, "Previously, the government postponed the mandatory timing for passing safety inspections until before project implementation approval, and this is a quiet situation in the opposition-majority phase after the general election," adding, "The opposition also agrees on the need for supply, so it is necessary to watch closely."

Lab head Ham Young-jin also pointed out, "The speed of enactment and revision of related bills, which will be actively pursued next month, will be a variable in the realization of the policy." He added that relaxing the consent requirements for establishing reconstruction associations and mandating the dispatch of mediation experts in case of construction cost conflicts in projects above a certain scale will have a positive impact amid frequent disputes over construction cost increases between contractors and construction companies.

Meanwhile, the amendment to the ‘Act on Urban and Residential Environment Maintenance’ (Urban Maintenance Act) to ease safety inspection regulations for complexes over 30 years old was proposed in the 21st National Assembly but was discarded. It was re-proposed in the 22nd National Assembly, but specific discussions have yet to take place. Although the ruling party and government are firmly committed to abolishing the re-levy tax, the opposition maintains a negative stance.