Overreliance on public supplies

The government and Seoul Metropolitan Government released measures to ramp up housing supplies in the capital. Under the outline, idle lots will be discovered, floor area ratios (FAR) for public housing will be increased and higher rises allowed. The government has trotted out 23 sets of real estate measures focused on containing demand through regulations. It has finally listened to outside voices screaming for more supplies. The quota was proposed at 132,000 residential units, higher than the expected 100,000. Authorities also eased their hard-line stance on redevelopments.

Still, whether the measures will calm a jittery housing market remains to be seen. The government will allow apartments for redevelopment to be built as high as 50 stories and FAR stretched to 500 percent. But eligibility would be allowed only to housing supplies provided by public developers like the Korea Land & Housing Co. and Seoul Housing & Communities Co. The state and Seoul city governments hope to redeem 90 percent of profits from the extra homes created through the increased space by mandating that public developers donate 50 to 70 percent of the additional apartments for lease or sale to low-income residents or newlyweds.

Although redemption is necessary to control excessive demand, it can dissuade cooperatives of aged apartment owners to give up redevelopment plans. Authorities must study harder to minimize the conflict over the forced social responsibility. They must balance the profitability and public role in fine-tuning redevelopment deregulation.

The employment of public or idle space also could stoke protest. The plan to convert the sites of Taeneung Golf Course in northern Seoul and Camp Kim in Yongsan District, central Seoul — as well as the lot designated for new Seoul Medical Center in southern Seoul — into residential areas also has spurred complaints from residents in the neighborhood. Other development projects in Yongsan and Sangam also could be challenged for turning so many popular public spaces into residential neighborhood.

Supply-end considerations should have been included from the very beginning of the development of new housing measures. The government has failed in housing policy because it viewed the issue through a political lens. Given the complexities in the business model and compensation negotiations, it may take nearly 10 years for the new apartments to become available. For now, authorities must concentrate on calming the heated market and correct procedural problems while executing the supply outline.