LH President: "This Year, 50,000 Housing Starts and 37,000 Purchased Rentals... Must Fulfill Role Despite Higher Debt Ratio"

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Han-jun Lee, President of Korea Land and Housing Corporation (LH), stated, "To stabilize the housing market in the Seoul metropolitan area, we will expedite the construction of 10,000 housing units this year in five 3rd phase new towns (Hanam Gyosan, Namyangju Wangsuk, Bucheon Daejang, Goyang Changneung, and Incheon Gyeyang), and strive to achieve the goal of starting construction on 50,000 units within this year."

At a press conference held in Sejong on the 4th, he said, "Some are concerned about the increase in LH's debt ratio, but when the real estate market is difficult and private construction companies avoid investment, it is the public enterprise's duty to fulfill its public role even if the debt ratio temporarily rises."

President Lee added, "Due to the downturn in the construction industry and restrictions on supply land, LH was only able to start construction on an average of 20,000 units from 2021 to 2023, but this year we plan to start construction on 50,000 units, and 60,000 or more units in the next two years. Seoul's jeonse prices have been rising for 58 consecutive weeks, and LH will expand supply to ease market instability."

He also said, "In the past, plans were made at the beginning of the year, but construction started at the end of the year, resulting in similar completion dates that affected the market with oversupply. For the units starting construction next year, we will begin design and ordering from this year and adjust the schedule so that construction is evenly spread from the first half to the second half of next year."

He continued, "We will shorten the time from housing approval to construction by promoting them simultaneously," and explained, "We will convert private housing construction sites to public sites for direct construction by the public sector." LH plans to prioritize supplying 10,000 units on land within the designated new town areas that are adjacent to existing cities where infrastructure can be utilized to accelerate housing supply in the 3rd phase new towns.

The funds required to build 50,000 public housing units will be raised by LH through issuing corporate bonds. President Lee said, "The scale of bond issuance this year is about 15 trillion won, and we believe issuing about 10 to 12 trillion won will be sufficient." He explained, "LH's debt is different in quality from other public enterprises' debt because the bonds are issued to purchase assets, which increases assets. The land is purchased, processed over 5 to 6 years, and then released to the market. When these are sold, funds are recovered, lowering the debt ratio."

He added, "Currently, LH's debt is about 153 trillion won, of which 70 trillion won is accounting debt that can be recovered by selling land and housing, and the remaining 83 trillion won is financial sector debt. Among the 83 trillion won, a significant portion is financed by low-interest housing funds, so there is no problem with LH's profitability and liquidity."

President Lee said, "Due to high inflation and high wages, there are strong factors pushing up sale prices, raising concerns about whether people can have the opportunity to own a home. Among the components of the 3rd phase new town sale prices, there is a land development cost, and we will control sale prices by minimizing this land development cost as much as possible."

He also said that purchased rental housing will be expanded intensively this year and next year, mainly in the metropolitan area, to stabilize jeonse prices. President Lee said, "LH's purchased rental housing was originally 27,000 units, but after public discussions including the Dundeun Jeonse program, it was increased to 37,000 units. To increase the new purchase agreement rate and construction speed, the task force (TF) directly under headquarters will be greatly expanded from 48 to 189 members."

He added, "We will also create a purchase agreement support team to increase the agreement rate with private construction companies and shorten the agreement period. The period from purchase agreement to completion currently takes two years, but we will reduce this by more than six months so that completion can be achieved within 1 year and 6 months to 1 year."

President Lee said, "With high inflation and high interest rates causing continued real estate stagnation, if public institutions like us do not prepare in advance, real estate issues will become a social problem in 2 to 3 years, and the social costs at that time will be greater. Through purchased rental housing, we will secure various housing types such as multi-family, row houses, and villas so that people can choose housing suitable to their circumstances, and provide work to small-scale, low-capacity construction companies to revitalize the neighborhood economy."

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