Small-scale urban regeneration 21,000 homes... "Good location but housing price stability is 'questionable'"

An old residential area in Seongbuk-gu, Seoul [Image source=Yonhap News]

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[Asia Economy Reporters Onyu Lim and Taemin Ryu] Among the newly announced housing supply plans by the government, totaling 52,000 units, 21,000 units come from candidate sites for urban regeneration leading projects. Among these, small-scale housing maintenance project sites accounting for 17,000 units include Siheung-dong in Geumcheon-gu, Mok-dong in Yangcheon-gu, Majang-dong in Seongdong-gu, and Myeonmok-dong in Jungnang-gu, Seoul. Experts expect that since most candidate sites are located near the city center, the housing supply will have a high effect on proximity between residence and workplace. However, concerns were also raised that it would be difficult to stabilize housing prices with only small-scale development excluding large-scale projects.

On the 29th, Park Wongap, Senior Real Estate Specialist at KB Kookmin Bank, said in a phone interview with Asia Economy, "Many candidate sites are located in or near downtown Seoul, so it is expected that housing supply with excellent proximity between residence and workplace will be possible." He added, "Small complexes are cheaper than large complexes, so they will serve as a stepping stone for young people with lower incomes to own homes." Jang Jaehyun, Head of Real Today, also said, "The intention to develop deteriorated low-rise residential areas is commendable," and added, "Since the scale is small, it will not have the effect of stimulating nearby housing prices compared to large-scale development."

However, there were also criticisms that such small-scale development is insufficient to stabilize housing prices in the metropolitan area. This is because it is difficult to supply apartments with excellent living conditions desired by demanders through street housing supplied by urban regeneration leading projects. Head Jang explained, "Street housing is not the type desired by demanders who lead housing price increases," and "They do not want to live in areas where old houses and apartments are mixed." Park also explained, "The recent trend in the housing market is community-type apartments, but mini apartments find it difficult to have such neighborhood facilities."

Ultimately, experts pointed out that only by revitalizing large-scale maintenance projects such as redevelopment and reconstruction can housing prices be stabilized. Kim Deokrye, Head of Housing Research at the Korea Research Institute for Human Settlements, said, "The epicenter of Seoul's housing price increase is the Gangnam area, but this supply plan mainly comes from non-Gangnam areas such as Gangbuk," and added, "In the end, small-scale supply is the government's only option excluding redevelopment and reconstruction."

He also noted that rapid resident consent is key for smooth housing supply. While the supply volume of new housing sites is virtually confirmed, housing supply can be stalled if residents oppose small-scale housing maintenance management areas. Professor Lim Jaeman of the Department of Real Estate at Sejong University said, "Selecting appropriate supply candidate sites and quickly securing the volume is most important." Park also pointed out, "The advantage of mini apartments is speed," and "Consensus with landowners is the key to supply."

Although the government announced it would investigate abnormal transactions to block speculative demand inflow, there are calls for more specificity. Researcher Kim said, "To manage proactively rather than post-facto, the government must establish principles and standards for abnormal transactions."

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