[Policy Pulse] What Kind of Housing Should We Supply Now

One- to two-person households make up 66% of Seoul...Affordable housing must be supplied
"High-density development in existing urban areas...Designing to share capital gains"

As housing prices in Seoul have surged, the government has followed strong demand-suppression policies with an ambitious housing supply initiative. In the "Housing Supply Expansion Plan" announced in September last year, it unveiled a plan to supply 1.35 million housing units over the next five years. In the "Plan to Expand and Expedite Housing Supply in Urban Areas" released on January 29 this year, it finalized a plan to secure sites for the rapid supply of 60,000 housing units.

Public attention is now focused on what kind of housing will be supplied and whether they themselves will be eligible to move into those homes. Should the government once again, as with the first-generation new towns announced in 1989 or the Bogeumjari Housing in 2009, concentrate on supplying low-priced apartments for the middle class in order to stabilize housing prices? Too many conditions have changed for that approach to work as before.

First, one- to two-person households now account for about 66% of all households in Seoul, meaning the main group driving housing demand is different from the past. To stabilize the housing situation for young people, affordable housing units must be supplied as a priority. The share of apartments in total supply has already increased sharply, making the supply of low-cost housing an urgent task. As of 2025, based on housing construction permits, 84.5% were apartments, while multi-family and multi-unit houses amounted to only 5,206 units. At the end of last year, the average transaction price of apartments in Seoul was about 1.5 billion won (based on KB Real Estate). The price-to-income ratio (PIR) stands at 13.9.

As the private sector's capacity to supply housing has expanded, the capacity of the public sector to supply housing has weakened rapidly. Public-sector housing now accounts for less than 10% of total supply. Moreover, unlike in the past, it is no longer possible to quickly deliver large volumes in a short period of time, so it is also difficult to induce an immediate drop in housing prices.

The government's decision to concentrate housing supply in urban centers is a sound one. Unlike at the time of the first-generation new towns, the announcement of plans to build third-generation new towns and provincial new towns did not lead to a decline in urban housing prices. Ultimately, the compact city concept of using existing built-up areas at higher density must also be applied to housing supply. The "3080+" measures in 2021, which I led, showed that simply making good use of low-rise residential areas, station influence areas, and quasi-industrial zones could enable the supply of more than 320,000 housing units in Seoul.

It is time to reconsider the housing supply objective of stabilizing prices by massively supplying medium- to large-sized public apartments. The focus should instead be on refurbishing deteriorated residential environments and continuously maintaining affordable housing so that citizens can live there stably. Regulations on floor area ratio, access to sunlight, daylighting, and parking must be adjusted so that a variety of multi-family housing types of 5 to 8 stories can be built on small block units. If sufficient quantities of low-cost multi-unit housing, urban studio-type housing, private dormitories, and officetels are supplied, a substantial portion of the housing problems facing the younger generation can be resolved.

Publicly supplied for-sale housing should not only be cheaper than market prices but also be designed so that the gain from the gap with market prices can be shared. Around 30% of all for-sale public housing should be supplied in a profit-sharing model to prevent the initial buyer from monopolizing the capital gains. In the United Kingdom, First Home units, and in the United States, Community Land Trust (CLT) housing, strictly regulate both the resale price and the eligible buyers so that affordable housing continues to be supplied not only to the first buyer but also to subsequent purchasers. This is well worth applying, at least to a portion of for-sale housing.

Stable housing supply is extremely important. However, the goal of housing supply should not be short-term stabilization of housing prices. As long as there is trust that deteriorated residential areas and old city centers will continue to provide affordable housing, sudden spikes in housing prices in particular neighborhoods can be regarded as a secondary issue.

Byun Changheum, Professor, Department of Public Administration, Sejong University

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