The government is expected to announce a real estate policy this week aimed at supplying over 50,000 additional housing units in the metropolitan area. Market attention is shifting from the quantity of supply to the speed at which it can be delivered. Even if new sites and urban idle land are identified, existing projects hindered by financing, compensation, and permitting issues may limit the actual impact of supply.
According to political and real estate industry sources on August 9, the government is finalizing its additional housing supply measures after two policy review meetings on August 3 and 7. The announcement is likely to occur on August 13.
The proposed additional supply is over 50,000 units in the metropolitan area. Potential sources include idle land from public institutions and schools in downtown Seoul, sites for relocating military bases, and high-density development in aging low-rise residential areas. The focus is shifting towards expediting the construction start dates of already secured third-phase new towns and public land rather than adding new supply.
The government's emphasis on the speed of supply stems from concerns that the construction performance over the next two to three years will not meet the demand in the metropolitan area. The government aims to start construction on an average of 270,000 units per year, totaling 1.35 million units by 2030.
However, experts agree that restoring the supply pipeline to connect planned housing to actual construction is a priority over simply increasing the number of new supply sites.
In the first half of this year, housing starts in the metropolitan area totaled 65,204 units, only 24.3% of the annual target of 268,000 units, and a 0.7% decrease compared to the same period last year.
Jin Mi-yoon, a professor at Myongji University's Graduate School of Real Estate, stated, “The supply pipeline from permitting to construction and completion is experiencing bottlenecks at the construction stage. Housing supply should be viewed as a problem that requires coordination among finance, taxation, and the market.”
In practice, many projects face delays in breaking ground due to various procedural and funding issues, even after securing land and developing business plans. Public land projects often experience extended timelines due to sequential processes like land compensation, environmental and traffic impact assessments, cultural heritage investigations, and permitting. Redevelopment and reconstruction projects are also delayed by construction costs, shared expenses, relocation costs, and funding issues.
The Korea Land and Housing Corporation (LH), the government’s supply execution agency, plans to reform existing project methods to alleviate these bottlenecks. The key is to implement a 'parallelization' of project procedures. Previously, each step had to be completed before the next could begin; now, tasks that can be conducted simultaneously will be expedited.
LH President Lee Seong-hoon remarked, “Due to low construction starts in recent years, the upcoming supply will also be very limited. It is crucial to increase construction starts on public land so that the public can feel the impact.”
The progress of previously announced supply sites will also serve as a benchmark for assessing the effectiveness of this new policy. A notable example is the Camp Kim site in Yongsan, Seoul, which was announced in the August 2020 policy as a site for 3,100 housing units. However, due to soil contamination cleanup, urban planning procedures, and consultations with relevant agencies, construction has yet to begin. The government has adjusted the supply target for this year to a maximum of 2,500 units, but the construction goal is set for 2029.
A real estate industry insider noted, “In this supply policy, it is essential to observe how much the newly announced supply differs from previously announced amounts and how much the construction start dates for existing projects can be advanced.”
* This article has been translated by AI.
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