Experts Say Shortening Approval Process Alone Won't Solve Housing Supply Issues

Seoul mayoral candidates from both major parties are competing to present promises for redevelopment projects, but experts agree that simply shortening the approval process will not resolve the housing supply crisis. They point out that the proposals lack specific alternatives to address the core issues of regulatory conflicts and rising construction costs. Additionally, both candidates have failed to present short-term measures for non-apartment housing to alleviate the immediate supply shortage, and there is a need for consistency with central government policies from the proposal design stage.

On May 14, experts evaluating the real estate policies of the mayoral candidates expressed agreement with the general direction of the proposals but criticized their superficial analysis, noting a significant gap from reality. They emphasized that while shortening the approval process is like starting the engine, it is essential to simultaneously release the brakes of finance and regulation for the supply clock to function properly.

Shim Hyung-seok, head of the Woo Dae-bbang Real Estate Research Institute, stated, "In a situation where regulations such as restrictions on the transfer of reconstruction association member status are in place, projects are often delayed due to members being blocked from progressing even if they want to move forward. Shortening the approval process without regulatory relaxation is merely half a measure."

Shim also pointed out that substantial incentives for private projects need to be clearly outlined in the proposals, especially amid soaring construction costs. According to the Korea Construction Technology Institute, the construction cost index rose to 134.42 in March, a 0.49% increase from the previous month and more than 30% higher compared to the base year of 2020 (100). The surge in construction costs leads to conflicts between associations and construction companies. Industry voices have consistently called for the introduction of standard contracts from the selection stage of construction companies and for the decisions of dispute resolution committees to have practical enforceability to alleviate this structural bottleneck.

Kim In-man, head of the Kim In-man Real Estate Economic Research Institute, criticized both candidates for lacking immediate short-term measures for non-apartment housing that could release supply into the market. He suggested supporting private construction financing to ease the financial burden on small builders and proposed direct development of parking laws and infrastructure as alternatives. He emphasized the need to strengthen oversight to ensure high-quality non-apartment housing is supplied to the market without defects. Kim stated, "Creating an environment where the private sector can supply high-quality non-apartment housing that is livable, even if not at the level of apartments, is a realistic supply measure that the Seoul city government can implement immediately. It is crucial to encourage the private sector to provide high-quality non-apartment housing rather than purchasing existing villas with tax money, which is the key to short-term supply."

Concerns have also been raised that without clearly distinguishing between promises that can be implemented solely by the Seoul city government, those requiring legislative action from the National Assembly, and those dependent on cooperation from the central government, the promises may stall during the term due to 'external factors.'

Seo Jin-hyung, a professor at Kwangwoon University, noted, "The key to realizing the promises lies in how closely both candidates can cooperate with the central government. Promises that do not differentiate between what can be achieved within the authority of the Seoul city government and what cannot may end up being mere election rhetoric." He added that specific financial initiatives at the city level are needed to address stalled projects due to issues like relocation costs or project financing.

Song Seung-hyun, head of Urban and Economy, emphasized that without regulatory relaxation, it is challenging for projects to progress, pointing out that there tends to be a disconnect between policies of the Seoul city government and the central government. He stressed the need for policy coordination and role-sharing with the central government to address economic issues such as construction costs.