President Yoon Suk-yeol visited a redevelopment site for aging residential areas in Seoul and stated, “I will reevaluate the redevelopment and reconstruction procedures from the beginning to ensure more housing can be supplied in the city.” The site in Moa Town, Jungnang-gu, Seoul, visited by President Yoon, is a project aimed at revitalizing small-scale, aging low-rise residential areas where large-scale redevelopment is challenging. The goal is to significantly relax regulations on aging housing zones like this one and actively supply high-quality new housing.
Despite Seoul’s housing supply rate being 94.2%, over 54% of housing consists of aged homes that are more than 30 years old. While in the United States and Europe, a home over 30 years old may not be considered old, the situation is different for us. The fundamental issue with our housing is the shortage of land to build new homes, so the only solution is to redevelop existing aging housing zones into new residential areas. However, the previous Seoul Mayor Park Won-soon and the Moon Jae-in government hindered housing supply with various regulations, citing reasons like “preserving history” and “no shortage of housing.”
With a shortage of available homes, the prices of new apartments and well-located houses skyrocketed. The housing subscription rate also went up, a problem created by fundamentally flawed policies. In Korea, individuals with specified bank accounts are eligible to submit applications for new apartment subscriptions well in advance, typically two to three years before the construction is finished. Successful applicants who secure the opportunity to purchase these apartments are required to make an initial upfront payment, interim down payments, and settle the remaining balance in installments to complete the contractual process.
The government has changed its policy direction, aiming to build a total of 2.7 million homes over five years, including 500,000 in Seoul. They also actively promote the relaxation of redevelopment and reconstruction regulations. Thanks to the easing of reconstruction fees and lower safety inspection standards, the number of buildings passing safety inspections, which was only 65 in the past five years, reached 163 in just one year. The designation of redevelopment areas, which averaged only 28,000 homes annually, more than doubled this year to 62,000 homes. Many cities nationwide, including Seoul and Busan, face poor living conditions in aging homes.
If the construction industry’s financial difficulties, rising costs of materials and labor, and other challenges are resolved and regulations are further relaxed, housing supply could increase again. By addressing speculative activities that may occur temporarily during this process, we can resolve the housing problem that is contributing to the declining birthrate.
