The real estate market is difficult to read, and so is the quest for homeownership. Government policies are equally challenging. This is where the complex nature of real estate begins.
Housing completions have dropped significantly. In May, the number of housing units completed nationwide fell to 12,913, a 51.0% decrease from the previous year. For the first five months of the year, completions were down 46.7%. As the number of available homes dwindled, the rental market tightened. In May, rental transactions totaled 65,698, a 29.6% decline from a year earlier, while the proportion of monthly rental transactions rose to 68.6% for the January to May period. With construction delays, the annual moving cycle continues, leading to a shock in the rental market.
The government has not remained idle. In May, it introduced non-apartment housing measures. On May 22, it announced plans for 90,000 rental units in the metropolitan area, and on May 26, it relaxed regulations on urban housing and officetels, promising to supply 110,000 units by 2030. While apartments take 3 to 5 years from groundbreaking to occupancy, urban housing and officetels can be built relatively quickly. The government believes that non-apartment housing is a practical solution to alleviate rental anxiety.
The approach is not inherently flawed. The issue lies in the fact that we have already traveled this path once, and the outcome was not favorable.
Lessons from a Decade Ago
Urban housing was introduced in 2009 for similar reasons. The government aimed to quickly supply affordable small homes for one- to two-person households by relaxing standards for parking, sunlight, noise, and amenities. It is important to note the market context at that time: the global financial crisis had led to falling home prices and over 150,000 unsold units. Today, however, we are experiencing a strong market with no external shocks, yet the government is resorting to similar measures in response to rental crises. This similarity arises not from market conditions but from the reflexive nature of policy responses.
The results were explosive. The number of urban housing permits surged from 1,688 in 2009 to 123,949 in 2012. However, of the approximately 230,000 units permitted between 2009 and 2012, around 190,000, or about 83%, were studio apartments. When regulations were relaxed, the market gravitated toward the smallest, quickest, and most profitable units rather than diverse housing options.
The consequences were felt later. With parking spaces allocated at one per two to three units, cars filled the alleys, and narrow access roads obstructed fire trucks. The spacing between buildings was tight, and safety and evacuation measures were not as robust as those in apartments. As the negative effects became apparent, the government tightened parking regulations again in 2013. However, the vulnerable housing that had already been constructed remained unchanged. The 2015 fire at the Daebong Green apartment complex in Uijeongbu was a stark reminder of these failures, resulting in five deaths and 125 injuries. It took a decade to loosen, suffer, and then tighten regulations again.
The measures introduced in May seem to disregard the lessons learned over that decade. The range for local governments to relax parking regulations has been expanded from 20-50% to 50-70%. The distance required for sunlight access has been reduced from 5 meters to just 5 meters for buildings up to 17 meters tall. The cap on the number of units has been raised from 300 to 700 in transit-oriented areas, and the requirement for community facilities has been relaxed if similar facilities are nearby. While the intent to speed up supply is understandable, it raises concerns as it reopens the very regulations that were tightened after previous incidents and complaints.
It is crucial to recognize that the term 'non-apartment housing' encompasses various failures. Urban housing represents a lower-quality type of housing. Officetels borrow the status of housing but are classified as quasi-housing. Living accommodations that were never intended as housing are sold as residential units, undermining the very category. Although these three types differ, they share a common root: the inability to build adequate housing on time led to attempts to fill the gap with alternatives. The current measures to convert knowledge industry centers into officetels and vacant commercial spaces into studios are an extension of this impulse.
Minimum Standards Matter More Than Speed
This does not mean we should halt the supply of non-apartment housing. The proportion of single-person households in Seoul is already high, and there is a clear demand for small, affordable homes close to workplaces. In urban areas where securing large plots is challenging, utilizing small parcels for housing is necessary. The rental market's pace is too rapid to wait solely for apartment supply. Non-apartment housing is a necessary supply option in the current market.
However, the conditions are more stringent than before. In 2009, urban housing sold well despite its drawbacks. Today, the aftermath of rental fraud has led to a reluctance to invest in villas, compounded by high interest rates and a tightening of real estate project financing. Even if regulations are relaxed to increase supply, if consumers turn away, vacant homes will remain. The same prescription is being pushed more aggressively, but the market is not as receptive as it once was. Therefore, the critical question is not whether regulations are being relaxed or how quickly homes can be built, but whether quickly constructed homes can provide long-term living conditions.
The failure of urban housing was not solely due to the relaxation of regulations. It failed because it was loosened without regard for quality. When speed and quality clash, the market always opts for speed. It tends to build smaller, denser, and cheaper units. If this choice is left solely to the market, the outcome will mirror that of 2009. We must establish a minimum standard that cannot be compromised while ensuring rapid construction.
This minimum standard is not something new. We already have established minimum housing standards. For single-person households, the law mandates a minimum of 14 square meters with a separate kitchen and a flush toilet, representing the basic threshold for dignified living. The issue is that this standard does not effectively serve as a threshold for private small housing supply. Moreover, the 14 square meter figure has remained unchanged since 2011, stuck for 15 years. In comparison, Japan's standard for single-person households is 25 square meters, and the UK's is 38 square meters. Our standard falls short of even half of those in developed countries. Even if urban housing regulations are relaxed, if we can effectively expand this benchmark to private supply and adjust it to current realities, we can at least prevent a resurgence of 'bee-hive studios.'
However, area is not the only concern. Even if a home is brand new, if cars are parked in the alley, escape routes are narrow in case of fire, sunlight, noise, and heating/cooling performance disrupt daily life, and there is no responsible party for maintenance, it is closer to temporary accommodation than a home. For non-apartment housing supply measures to succeed, it is essential to clarify not only "how many units are built" but also "which types of homes should be built and which should not."
The supply method must also change. Simply inserting studios into small plots makes it difficult to create adequate parking, alleys, walkways, and safety facilities. We must consider not only individual buildings but also the flow of the neighborhood. For non-apartment housing to fill urban gaps, it must be planned and managed collectively to ensure that these gaps do not become urban scars.
For single-person households, the interior space alone does not complete a living environment. Shared facilities such as laundry rooms, lounges, small meeting spaces, and support programs are necessary to transform isolated rooms into livable homes. The ability to live long-term is also fundamental. If non-apartment housing is only consumed as temporary spaces, tenants will continue to be displaced, and neighborhoods will deteriorate. Supply measures must extend beyond construction to include who will manage, repair, connect, and take responsibility for these homes. Only then can non-apartment housing become a foundation for living rather than a temporary shelter.
Quality Homes Must Also Be Profitable
Of course, raising standards may lead to concerns about profitability. This is a valid point. No matter how good the standards are, if developers do not build, supply will not increase. Therefore, the solution lies not in lowering housing standards but in reducing costs and uncertainties for developers when building quality homes. When it comes to building good homes, we should not only demand higher standards but also ensure faster processes and lower financing costs. Projects that incorporate excellent design and shared spaces for residents should be given more leeway for construction, and shared facilities should not be seen merely as a burden that reduces rentable space. It may also be worth considering providing more opportunities for future projects to developers who build and manage well. Instead of making it easier to build poor-quality homes to match profitability, we should design systems that ensure good homes can also be profitable.
The public sector's role should not be limited to merely securing quantities. If the government is purchasing or supporting housing, stricter standards should be enforced. Homes that do not meet minimum area, parking, safety, insulation, and maintenance standards should not be recognized as supply achievements. If the public accepts any housing, the private sector will follow suit. Conversely, if the public only selects livable homes, the private sector will build to those standards. Expanding supply should be a policy that sets market standards rather than merely a financial injection.
Non-apartment housing is indeed a practical exit from the rental crisis. Apartments alone cannot meet the urgent demand, and small, quickly supplied homes are necessary for urban single-person households and young people. However, this does not mean that fast housing can be of poor quality. What is needed now is not to stop the supply of non-apartment housing but to ensure that it is built to be livable.
It is easy to loosen the screws that were tightened over a decade. However, the moment we forget why those screws were tightened, the same failures will return. The allure of non-apartment housing always lies in speed. The skill of policy lies in determining how much to concede in the face of that allure and where to draw the line. Homes must be built quickly, but they must also endure. The lives of those who live in those homes must endure as well.
* This article has been translated by AI.
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