[비즈한국] The Lee Jae-myung administration has unveiled its first housing supply plan since taking office. The blueprint aims to supply a total of 1.35 million new housing units in the Seoul metropolitan area over the next five years. Instead of selling public land to the private sector, the government plans to accelerate supply by having the Korea Land and Housing Corporation (LH) directly lead development. Furthermore, it intends to maximize the use of aging public facilities and idle land, while promoting private-led redevelopment projects to increase housing supply in urban centers where demand is high.
On the 7th, the government held a meeting of ministers related to real estate and announced the new administration's "Housing Supply Expansion Plan." The plan involves supplying 1.35 million new housing units (270,000 per year) in the metropolitan area over the next five years through 2030. This is an increase of 112,000 units annually compared to the average annual supply of 158,000 units over the past three years. To achieve this goal, the government plans to focus on: expanding and accelerating public land supply (372,000 units); redeveloping aging facilities and idle land (38,000 units); supplying housing in urban centers (365,000 units); improving conditions for private supply, including new-build rental housing (219,000 units); and other housing projects such as non-apartment units (355,000 units).
The core of the plan is public-led expansion in the metropolitan area. The government stated it would shift from selling public land to the private sector toward a model where the Korea Land and Housing Corporation (LH) directly implements and develops the projects. The intent is to prevent problems where private developers enjoy development profits during real estate booms but delay or halt supply during downturns. In addition to direct LH implementation (53,300 units), the government plans to provide an additional 121,400 units in the metropolitan area by shortening project timelines (46,000 units) and optimizing or rezoning public land. Over the next five years, a total of 372,000 units—including the existing 251,000 units already planned—will be supplied on public land in the metropolitan area.
Supply in high-demand urban centers will also be expanded. This will be achieved by utilizing aging public facilities and idle land, and by promoting private-led reconstruction and redevelopment projects. The government announced it would supply 58,000 units by leveraging idle land, aging public rental housing (23,000 units), public offices (28,000 units), and school sites within cities. Private-led redevelopment will be revitalized through institutional improvements such as shortening project durations (234,000 units), improving maintenance projects in first-generation new towns (63,000 units), and reintroducing the public urban complex project model (50,000 units). As a result, 365,000 units will be supplied in metropolitan urban centers over the next five years.
Conditions for private housing supply will also be improved. To encourage supply, the government decided to drastically overhaul various regulations and introduce rapid supply models. It plans to ease restrictions such as outdoor noise standards and donation requirements for school sites, and support the supply of non-apartment housing by utilizing vacant commercial spaces in urban areas. There is also a plan to expand housing supply using modular construction methods. The government will expand new-build rental housing (140,000 units) and publicly-supported private rental housing (21,000 units) for quick supply, and strengthen public guarantees to prevent supply contractions caused by the credit crunch in the real estate project financing (PF) market. This accounts for 219,000 of the new supply units.
Real estate market oversight will be strengthened. The goal is to enhance market transparency by establishing a foundation to block illegal transactions and irregular funding. To this end, the government announced it would create a new organization dedicated to investigating and probing real estate crimes to capture and respond to them immediately. The Ministry of Land, Infrastructure and Transport will conduct planned investigations, and the National Tax Service will focus on tax audits to preemptively root out market-disturbing activities. Requirements for submitting financing plans when purchasing a home will be tightened to include details on loan types and financial institutions, and the reporting system will be revised to require the submission of contracts and proof of down payment deposits when reporting real estate transactions.
Additional demand-side suppression measures were also introduced. The government decided to tighten the Loan-to-Value (LTV) ratio for mortgage loans in regulated areas from the current 50% to 40%. It prohibited non-owner-occupant housing traders and rental business operators from receiving loans in metropolitan or regulated areas and reduced the maximum limit for jeonse (lump-sum deposit) loans for single-home owners from 300 million won to 200 million won. Furthermore, the government expanded the Minister of Land, Infrastructure and Transport’s authority to designate land transaction permit zones within the same city or province if there are concerns about market overheating or speculative activities. Previously, such authority belonged to city/provincial governors for zones within their jurisdictions, and to the Minister of Land, Infrastructure and Transport only if the zone spanned multiple cities/provinces or involved public development projects.
Kim Yun-deok, Minister of Land, Infrastructure and Transport, emphasized, "For fundamental stability in the housing market, ensuring a sufficient supply of housing is more important than anything else," adding, "We will strive to provide the public with continuous confidence in housing supply and establish a market structure where supplied housing is fairly provided to those with actual demand."
Previously, on June 27, the government announced real estate measures centered on suppressing demand. The core of the policy was to limit the LTV for mortgage loans in the metropolitan area and regulated zones to 600 million won, regardless of income. The measures blocked multi-home owners in the metropolitan area from utilizing mortgage loans and mandated that those purchasing homes in the metropolitan area with mortgage loans must move in within 6 months, effectively making it impossible for those without actual housing needs to obtain bank loans.
Since the June 27 real estate measure announcement, the upward trend in home prices has entered a lull. According to the July nationwide housing price trend survey released by the Korea Real Estate Board, the overall national housing (apartments, row houses, detached homes, etc.) sales price rose by 0.12%, a narrower growth rate compared to the previous month (0.14%). Seoul, which had been showing a rapid surge, saw its rate drop from 0.95% to 0.75%. Seoul's housing price growth rate, which stood at just 0.08% in January, had risen to 0.52% in March when land transaction permit zones were lifted. It fluctuated thereafter, rising to 0.95% in June—immediately after the presidential election—marking the highest level since September 2018 (1.25%).