Toward a lasting and stable supplyThe government has toughened the standards for evaluating the safety of new apartments in redevelopment projects. Among the various factors affecting the safety of new buildings, the authority plans to raise the share of structural stability to 50 percent from 20 percent, while lowering the share of appropriate residential environment to 15 percent from 40 percent.
State-level public organizations will also be required to join the safety inspection to ensure stricter review and approval for redevelopment projects across the country. That means the authority for approving redevelopment projects will be handed over to the central government from local governments. That will surely make it more difficult to start rebuilding old apartment complexes even when they do not have serious structural problems.
The measures are aimed to cool the prices of apartments in Gangnam, southern Seoul, upon judgment that their value has been inflated on expectations for redevelopment. Redevelopment potential has fanned speculation all across Gangnam. Tighter regulations on redevelopment, therefore, are necessary. The bubbles may fizzle out if there are lesser expectations that residential properties can be redeveloped without difficulty when they reach a certain age.
But the measure can stoke side effects. The regulation would hurt supply in Gangnam and other parts of Seoul where population density is severe due to better education and other infrastructure. As a result, existing home prices could shoot up further.
Concerns about supply shortage often raise home prices. To ease concerns, the government must come up with additional measures to meet demand for upscale home-seekers. It must consider creating a comfortable residential infrastructure outside Gangnam. In order not to repeat the real estate mess of the Roh Moo-hyun administration, the government must provide a lasting and stable supply plan on top of the cap on demand.
JoongAng Ilbo, Feb. 22, Page 34