30,000 more affordable housing units plannedAs deposits on jeonse (lump-sum rental contracts) show little sign of easing, the government is increasing the supply of affordable housing targeted for low-income households.
The Ministry of Land, Infrastructure and Transport on Thursday said it will increase the number of affordable units, including “Haengbok apartments,” public housing offering long-term leases at a reasonable price, as well as “New Stay,” apartments built by private construction companies but offered at low prices. The number will be increased by 30,000 units from the initial plan to a total of 300,000 units by 2017.
“Demand for public lease housing, where tenants can live for a long period without fearing a sharp increase in rent, has increased due to the continuous rise in rent and frequent moving,” a ministry official said. “As a result, we have decided to increase the supply of public housing.”
The government has raised the number of Haengbok apartments from its earlier target of 140,000 units to 150,000 units, while for New Stay, the number of apartments will be raised from 130,000 to 150,000.
The government is set to finalize the land that the 140,000 Haengbok units will be built on.
These apartments will be available to lower-income households as well as young single people who have been having trouble finding decent, affordable accommodations with their limited financial resources, as well as newlyweds and senior citizens. High rental deposits have been considered one of the key factors holding back young people from getting married.
The government has decided to increase the supply of apartments for young people from its initial target of 5,000 units to an additional 5,000 units. These units are intended for college students or those who have been seeking a job for two years. The government will also supply some 300 affordable lease apartments to young entrepreneurs as a test.
For senior citizens, some 1,200 units of low-price lease apartments in 11 areas will be provided, particularly in the greater Seoul area, including Wirye New Town in southeastern Seoul and Gwanggyo New Town in Suwon, Gyeonggi. This is an improvement from 650 units in eight locations.
One of the biggest differences from past housing measures is that the private sector is being urged to participate as government funding is limited.
The government will adopt a Haengbok housing real estate investment trust. It will build and supply the Haengbok apartments on land owned by state-run companies including LH or local government corporations.
The government will also speed up construction of New Stay apartments that are built by private construction companies. It is looking into land that will lift development restrictions for agricultural industry development purposes within the first half of the year to supply 3,000 units.
According to the Korea Appraisal Board, jeonse prices have been rising for 44 consecutive months. This month, jeonse prices rose 0.13 percent compared to March. That’s 0.03 percentage points higher than the jeonse price increase in March.
The appraisal board said that while there has been a new supply of apartments this month, many potential homebuyers decided to continue living on jeonse. Additionally, the supply of jeonse apartments fell short, as spring is usually a high-demand season, with couples getting married and people relocating to better neighborhoods.
BY LEE HO-JEONG [firstname.lastname@example.org]