[The Editors' Verdict] Government's "All-In" Housing Supply... Unsettling Outlook for Next Year's Home Prices

Park Sang-woo, Minister of Land, Infrastructure and Transport, stood before the microphone on the 12th, a week after the emergency martial law situation on December 3rd. When concerns arose that housing prices might continue to rise next year due to a shortage of housing supply, he stepped in to directly address the issue.

He emphasized that "the largest-ever housing supply will be achieved next year." The housing supply volume he revealed for next year amounts to 252,000 households. However, this does not refer to the number of houses immediately available for occupancy. These are houses that still need to go through permits, groundbreaking, and completion stages. It is highly likely that the outlines of these buildings will remain unclear next year as well.

Among these, 20% are planned to apply for permit approval or start construction in the first half of next year. This means about 50,000 households are intended to be released to the market quickly. However, the Korea Land and Housing Corporation (LH), which supplies most of the public housing this year, started construction on about 41,000 households this month, which is 83% of this year’s target volume (according to Democratic Party lawmaker Lee Yeon-hee). The construction start LH refers to is a paperwork-based start, meaning design and other preparations are complete and the project has entered the construction phase. If this kind of construction start is considered, 100% supply in the first half of next year might be possible. Conversely, it can be read that the government is boasting as if it will massively build houses by the first half of next year, but the reality is not so.

In particular, the government announced through this year’s comprehensive housing plan that it would supply 90,000 public sale houses and 35,000 public rental houses. However, the actual number of houses supplied was only 4,700 (according to Democratic Party lawmaker Park Yong-gap). As of the end of November, the achievement rate for public sale housing targets stood at 5.2%.

The government also said that the number of move-in units next year would be 10,000 more than this year, totaling 48,000 households. This figure refers to statistics from the Korea Real Estate Board as of last October. However, private information companies’ tallies are about 10,000 households lower. Private sectors (such as real estate platforms like Zigbang) believe that it is difficult to have more than 40,000 households moving in, even if estimates are increased.

The government included row houses and multi-family houses with 30 or more units in its announcement. The government believes that "regardless of the supply type?general sale, association member sale, rental, etc.?an increase in housing stock can have a positive effect on price stabilization (explanatory material from December 23rd)."

This is merely a so-called “all-in” approach to supply volume. Apartments and villas differ in price and demand. It is uncommon for someone living in an apartment to move to a villa. While the government failed to curb soaring apartment prices throughout the year, it also became more difficult for those living in villas to move into apartments.

In fact, even when examining the supply-demand situation using the government’s “all-in” method, the housing supply shortage does not disappear. The Korea Housing Industry Institute calculates a housing supply-demand index by combining apartment sale volumes and other housing completion volumes. This supply volume and the demand volume presented in the government’s 3rd Long-term Comprehensive Housing Plan are used to calculate the index, which is expected to record 72.6 next year. This is no different from this year (72) or last year (72.4). In particular, the institute also predicted that a cumulative supply shortage of 500,000 households will accumulate over four years until the end of next year since the start of the Yoon Suk-yeol administration.

The determination of the minister, who stepped up to fulfill his role during the impeachment crisis, is commendable. However, the effort was insufficient. No citizens will be fooled by an all-in approach to housing supply. It only served as a good opportunity for the government to realize that there is no clever way to increase housing supply.

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