Housing Stability and Construction Industry Revitalization... Accelerating the Expansion of Housing Supply

President Yoon Suk-yeol met with young people and newlyweds struggling with housing issues, residents of complexes living in old houses facing difficulties with reconstruction, and housing supply operators at a livelihood discussion held on the morning of the 10th at Aram Nuri in Goyang-si, Gyeonggi-do, to listen to various opinions.

After personally inspecting the aging residential environment of the first-generation new towns that day, President Yoon said, "The inconvenience in daily life is at a serious level," and promised, "We will support prompt reconstruction." He added, "We will abolish excessive regulations such as punitive taxation on rental business operators and multi-homeowners."

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The necessity of expanding housing supply in urban areas has been consistently raised both inside and outside the market, as much as the government's determination to do so. Due to high interest rates, rising raw material prices, and project financing (PF) risk burdens, housing permits, construction starts, and sales performance have sharply declined, increasing the sense of crisis.

Last year, the government laid the foundation for expanding housing supply by passing the 'Special Act on the Maintenance and Support of Aging Planned Cities' and the 'Amendment to the Act on Excessive Profits from Reconstruction' in the National Assembly. However, it was still seen that excessive supply regulations limit housing supply in highly preferred urban areas.

The recent measure allowing reconstruction projects to start without safety inspections is analyzed to target urban areas such as Seoul with many aging houses. Notably, it relaxed the safety inspection regulations strengthened during the Moon Jae-in administration from the perspective of 'citizens' choice rights.' In fact, only 65 complexes passed safety inspections during the previous administration's five years, but over 160 cases have been reported this year alone under the current administration.

Lee Eun-hyung, a research fellow at the Construction Policy Research Institute, explained, "Safety inspections will be revised in terms of evaluation items and scoring according to policy goals, and eventually, safety inspections may become a simple procedural step. During market downturns, deregulation does not lead to rapid price increases, so preparing the system for the future is an appropriate direction."

Interest in designating leading districts for reconstruction of aging planned cities is also expected to rise. In the case of first-generation new towns, the government has announced a significant relaxation of floor area ratios, and with the acceleration of project promotion, demanders are expected to have considerable expectations for asset value appreciation.

The plan also includes easing building and location regulations applied to urban lifestyle housing and officetels, and excluding newly built small housing from the housing count when calculating tax burdens. Ham Young-jin, head of the Zigbang Big Data Lab, said, "It is expected that project promotion reviews will increase mainly around metropolitan area station districts densely populated by one- to two-person households." However, he predicted that market recovery might be limited due to difficulties in related PF loans.

Accordingly, the government decided to support the swift resumption of construction by preparing a pool of alternative contractors in response to construction industry restructuring triggered by Taeyoung Construction's workout application. Additionally, to revitalize construction investment, 35.5% of the Ministry of Land, Infrastructure and Transport's budget execution management target of 56 trillion won will be concentrated in the first quarter of this year.

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