"Only 60,000 Units from Public Sector... If 90% Private Supply Stalls, Seoul's Housing Shortage Remains Unsolved" [Real Estate AtoZ]

National Assembly Discussion on "Activating Housing Supply"

Although the Lee Jaemyung administration is accelerating public-led housing supply, experts have diagnosed that the government's supply targets will be difficult to achieve unless the private sector, which accounts for over 90% of total supply, is revitalized.

During the "Policy Directions for Activating Housing Supply" discussion held at the National Assembly Members' Office Building on the 31st, there was general consensus on the need to expand public housing supply, but a series of comments pointed out that it is difficult to meet the quantity target through public supply alone. The discussion was co-hosted by Assembly members Bok Giwang, Kwon Youngjin, Yeom Taeyoung, and An Taejun from the National Assembly's Land, Infrastructure and Transport Committee, and co-organized by the Korea Housing Association, Korea Housing Builders Association, and Korea REITs Association.

Kim Jeongseop, a professor at Ulsan National Institute of Science and Technology (UNIST), stated, "Over 90% of Seoul's housing supply comes from the private sector," adding, "The housing shortage in Seoul reaches 250,000 units, but public measures only account for 60,000 units." He continued, "If 456 redevelopment projects in Seoul succeed, the net increase would be about 100,000 units, surpassing public measures." Cho Minwoo, Director of Housing Redevelopment Policy at the Ministry of Land, Infrastructure and Transport, also said, "The share of public redevelopment projects is only 4% of the total, with the remaining 97% in the private sector," emphasizing, "While public redevelopment activation is important, revitalizing the private sector is essential."

Lee Dongjoo, Executive Director of the Industry Division at the Korea Housing Association, remarked that "the fundamental problem of redevelopment projects is profitability," pointing out, "Policies have been introduced to speed up permit processes, but there is still no legislation to improve profitability." He noted that due to the lack of detailed standards for development contributions, each local government operates under its own ordinances, and the purchase prices for rental housing built through redevelopment projects are set much lower than market reality. Lee further stated, "The war in Iran has destabilized material supply, raising concerns that the surge in construction costs seen during the Covid-19 pandemic could repeat." Director Cho Minwoo added, "We are reviewing various measures to enhance profitability," stressing, "Above all, the passage of the Urban Redevelopment Act amendment, which legislates the 9.7 Housing Supply Expansion Plan, is urgently needed."

On the 31st, Professor Changmoo Lee of Hanyang University (center), who chaired the 'Policy Directions Discussion for Revitalizing Housing Supply' held in the 2nd Small Conference Room of the National Assembly Members' Office Building in Seoul, is speaking. Photo by Seo-yoon Choi

Kim Deokrae, Director of the Housing Research Division at the Housing Industry Research Institute, argued that the role of registered private rentals must be expanded again as the shortage of jeonse (lump-sum deposit lease) properties worsens and monthly rent burdens grow. Kim commented, "After the jeonse fraud incidents, demand for institutional rentals has increased, but the stock of registered private rentals is declining every year," adding, "Public rentals alone are insufficient, so private supply is essential."

There was also criticism that stricter guarantee requirements from the Housing and Urban Guarantee Corporation (HUG), implemented in response to jeonse fraud, are blocking the supply of non-apartment rental properties such as villas. Kim Hyungbeom, Head of Policy Management at the Korea Housing Builders Association, pointed out, "The guarantee claim rate for corporate rental operators in the past was only 0.3–0.4%, but now the same guarantee method applies as to individual rental operators," adding, "With prices recognized at 20–30% below previous levels, operators are forced to return the difference or deposit cash." Kim further noted, "Corporate rehabilitation filings are on the rise, and sites at the breaking point are waiting in a dangerous situation."

In response, Cho Seongtae, Director of Private Rental Policy at the Ministry of Land, Infrastructure and Transport, stated, "We will soon devise improvements to the rental deposit guarantee system." The Ministry has already announced in its "2025 Comprehensive Housing Plan" that it will improve the method for calculating housing prices used as the standard for registered rental operators' guarantee requirements.

Park Wongap, Chief Real Estate Expert at KB Kookmin Bank, suggested, "Since apartment construction takes a long time, regulations on alternative housing such as residential officetels, which can be supplied immediately, should be relaxed as well." It was also pointed out that due to unclear pricing standards during the conversion to sales of publicly supported private rentals, confusion is arising on the ground.

Toward the end of the discussion, there was a brief commotion when someone from the audience protested that "concrete answers on sensitive issues were missing." One developer, who said he had been in urban development for over 30 years, took the microphone and said, "I spent 300 billion won building rental housing, but over the last 10 years, I was able to recover only 150 billion won. How can private rental activation be possible in a structure where capital recovery is impossible?"

Some audience members also protested, "Are the experts just going to talk among themselves and be done with it?" prompting Assemblyman Bok Giwang to step in to calm the situation. Bok said, "The Ministry of Land, Infrastructure and Transport sidestepped sensitive topics and responded vaguely. They should have provided more concrete explanations," adding, "We will narrow down the key issues and continue with additional discussions in the future."

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