[Viewpoint]Home, sweet home?Through his TV town hall meeting, “Dialogue with the Nation,” President Lee Myung-bak expressed concern over decreasing supply of housing units and his hope to lower housing prices. He emphasized his preference for redevelopment and reconstruction of existing residential areas over new city development, and expressed a will to open up part of the green belt area for development.
People may have various problems with this stance, but three key issues have surfaced: Is there still a need to supply mass housing?
If houses need to be constructed, which is better - redevelopment and reconstruction of existing residential areas or creation of a new city? And is there a fundamental need to promote development of the green belt area?
There is still a need to mass- supply houses in the Seoul metropolitan area, especially within commuting distance from Seoul.
It is telling that the prices of housing units in Gangbuk, the area north of the Han River, and of small-sized, low-priced units have skyrocketed rapidly since 2006. If the prices of small homes in the Gangbuk area, especially rental prices, continue to rise sharply, this will cause a social problem that is of a different nature from those which took place in 2005 and earlier, when only the prices of housing in Gangnam, south of the Han River, rose.
There is no comparison between these situations: In one, people were envious of other people whose home prices rose - but they could always buy a cheap home if they crossed the river. In the second, people could end up on the street because they have nowhere to go.
Such a situation is caused by neglecting the supply of housing units in anticipation of future demand.
An average of 317,000 housing units were constructed in the metropolitan area and 123,000 in Seoul, from 2000 to 2003 each year.
During the following four years since then, however, the annual average has dropped to 220,000 units in the metropolitan area and 53,000 homes in Seoul.
In Gangnam, 25,000 homes will be reconstructed through next year, but in Gangbuk, where the new town development projects will go into full swing, it is highly likely that housing prices will skyrocket due to short supply.
Some people take Japan as an example and say there is no need to supply housing in big numbers because of the advent of an aging society and reduction in the population. However, that will be 10 to 15 years from now. We cannot neglect people who need housing before then.
If a detailed plan, including location and types of housing units, as well as job creation, is established, we can avoid the failures of Japan.
Second, when the decision is made to construct houses, the number of housing units that can be built in existing urban areas through redevelopment and reconstruction is not enough. Since 2004, around 80,000 units were authorized for redevelopment or reconstruction in Seoul, but the progress of the projects is slow due to regulations, and the actual percentage of increase from the existing number is only 10 to 30 percent.
Redevelopment and reconstruction are more significant in that they enhance the functioning and aesthetics of the city, and it should be seen as a supportive rather than an alternative means of development of new cities.
Ultimately, it is inevitable that new cities will have to be developed, but I doubt whether new cities currently under construction are in locations where people can commute to Seoul; whether necessary traffic networks are provided; and if not, whether the cities themselves can create sufficient jobs.
Securing jobs is, especially, a major factor that can sustain cities in times of an aging society and shrinking population.
Under the current situation, there is a high possibility that new cities will not fill the housing shortage in Seoul or sustain businesses and will become ghost towns in the future.
Since the construction of second-generation new cities, the new city projects actually give an impression that people have given up on the idea of commuting to Seoul.
They should expand the construction of infrastructure and make it possible to attract jobs by easing regulations on the Seoul metropolitan area.
Lastly, the green belt area has the advantage of being in good locations near Seoul and require relatively smaller investments in infrastructure for development.
It also has wide areas of flat land and land that is not “green.” Nevertheless, it is necessary to be ready for a war to ease green belt regulations.
It was not long ago that the previous two governments decided on the overall size of areas to be deregulated annually through 2020. Therefore, it will not be easy to turn this upside down again.
They can start with creating a favorable public opinion, but it is difficult to expect mass construction in a short time.
In order to supply housing at an affordable price, it is necessary to have various methods for securing land.
The perception of President Lee that it is necessary to take a bold action to deregulate existing rules is right.
Although redevelopment, reconstruction and utilizing green belt areas are all necessary, supplying housing on a large scale is possible through the construction of new cities.
However, difficult problems, such as the establishment of infrastructure that covers a wide area and improvement in the methods of securing jobs, should be resolved.
*The writer is the dean of the Graduate School of Real Estate Studies at Konkuk University.
by Son Jae-young
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