Public Housing to Be Built on Dormitories, Parking Lots, and Vacant Homes in Seoul: "Shortage of For-Sale Units Could Drive Up Home Prices"

Average Annual Apartment Construction Starts in Seoul Drops to 20,000 Units Over the Past Three Years

Policy Tilted Heavily Toward Public Rental Apartments

"Public Sector Should Prime the Market, Private Sector Must Open New Opportunities"

Apartment complexes in downtown Seoul. Photo by Yonhap News

Among the sites secured by Seoul Housing & Communities Corporation (SH Corporation) for public housing construction, there are numerous small parcels scattered throughout Seoul. According to the "Housing Supply Plan" document submitted by SH Corporation to Assemblyman Lee Jongwook from the People Power Party, this year, 32 units will be supplied through the remodeling of the public dormitory in Gongneung-dong, and 36 units at the Cheongseok parking lot in Sangdo-dong, Dongjak-gu. The housing supply sites this year also include a vacant home in Sinyoung-dong, where 14 units will be provided for rent.

If the land is not owned by SH Corporation, the company cannot determine the ratio of homes for sale versus those for rent. When SH Corporation carries out public housing construction projects on state or public land through project implementation and similar methods, the ratio of rental to for-sale housing is set by the entity that owns the land. An SH Corporation official stated, “There are no specific regulations on the supply ratio of for-sale to rental public housing when building public housing on state or public land. The supply ratio is determined by the institution that owns the land.”

Because the institution that owns the land sets the ratio, the proportion of homes for sale in the total supply over the next five years will further decrease. This means the number of projects where SH Corporation both owns and develops the land is steadily shrinking.

With private sector housing sales stagnating, if even the relatively affordable public housing supply shrinks, securing a home in Seoul will become even more difficult. Given that housing supply is already trailing demand, the decrease in homes for sale could become a trigger for rising home prices. The number of housing starts—a figure that can serve as a proxy for future supply—has declined compared to previous years. According to data from the Ministry of Land, Infrastructure and Transport's statistics portal, the number of apartment housing starts in Seoul dropped from 44,894 units in 2022, to 27,426 units in 2023, to 21,821 units in 2024, with the average over the past three years falling to around 20,000 units. Considering it typically takes more than three years from groundbreaking to completion, the likelihood of supply increasing any time soon appears slim.

An official from the construction industry said, “Carrying out development projects in Seoul, unless they are redevelopment projects, is not easy. Even with an increase in housing sales this year, the lack of new projects means there is little expectation for sales performance.”

By contrast, the supply of rental units will steadily increase through 2030. For example, all 1,336 units in Hwagye 5 Complex, scheduled for 2029, have been designated for rental, and in 2030, 1,014 rental units will be built at the Yeomgok-dong garage site in Seocho-gu, one of the “Gangnam 3 districts.”

The current administration is also emphasizing a public housing supply policy that centers on rentals. Last month, Korea Land & Housing Corporation (LH) unveiled a plan to expand the supply and improve the quality of public rental housing under the goal of creating “public rental housing where everyone wants to live.” The government plans to increase the supply of larger public rental units, and to convert private-sector land near subway stations into LH-led projects, thereby advancing public rental housing in these transit-oriented areas.

If even public housing supply contracts amid skyrocketing private sector sales prices, it will inevitably stimulate real demand. The strong demand for housing in Seoul translates directly into higher prices. According to the Korea Real Estate Board’s housing supply-demand trend, the Seoul apartment sales supply-demand index for the first week of this month (as of April 6) was 103.1. This indicates that demand continues to outpace supply despite lending restrictions. The index signifies that a value below the baseline of 100 indicates supply is stronger, while a value above 100 means demand is stronger. The index has remained above 100 for 12 consecutive months since May last year, and exceeded 105 in February this year.

Experts emphasize the need for supply policies that match the needs of different groups of housing demand. In addition to the public sector’s focus on rental housing for vulnerable groups, it is also necessary to revitalize the for-sale housing market through the private sector. Nam Hyukwoo, a research fellow at Woori Bank Real Estate Research Institute, said, “When allocating rental units for housing stability, it is important to also allocate for-sale units in a way that enables people to buy homes and build assets, so as to find a ‘balance point.’ The public sector should act as a primer, while the private sector opens the way. There should also be concrete guidelines for revitalizing urban redevelopment projects so that the ‘public-private two-track strategy’ can function effectively.”

Kwon Youngsun, team leader at Shinhan Bank Real Estate Investment Advisory Center, said, “Some groups need to secure housing through public rentals, while others seek to buy homes according to market logic without government assistance. Multi-layered supply policies that fit each group’s needs are necessary.”

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