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Stabilize the housing market with actions

Published: 11 Aug. 2024, 20:27

The government is doubling down on housing expansion in hopes to cool the newfound heat in the apartment market in the capital region. Under the Aug. 8 housing measures, the restrictions on greenbelt zones in Seoul and nearby areas will be lifted to make way for 80,000 housing units. It will be the government’s first major greenbelt surrender for housing in 12 years.

About 24.6 percent of the capital area is defined as a “greenbelt,” subject to development restriction for environmental reasons. The benefit will first go to Seocheo District with the widest greenbelt area and another affluent Gangnam District where land development will be easier to execute. The government opted for the radical move of compromising greenbelt zones after apartment prices in Seoul rose for 20 weeks.

The government also plans to broaden the third urban development zone to house 20,000 more apartment units. The seizure of excess gains from redeveloped housing areas will be waived, and the floor area ratio for reconstructed apartments also will be temporarily upped to improve business prospects for redeveloped and reconstructed apartment supplies. The government will seek a special act to speed up reconstruction and redevelopment in Seoul. The state-run Korea Land and Housing Corp. will purchase any undersubscribed apartment units developed in public lots around the capital. The government will keep up public rental units until the non-apartment multi-residential housing market recovers from the recent rent scam scare. In Seoul, the government will buy all newly built residential villas to supply sufficient rental units until the market fully normalizes.

The latest salvo of housing measures paid heed to the voices of the market and experts as they move away from the makeshift actions of the past. Since it would take 8 to 10 years from land purchase to construction, greenbelt lifting is a long-term supply measure. It cannot convince immediate buyers. The redevelopment and reconstruction easing should be expedited to meet the immediate demand. The government would have to earn the support of the majority opposition to legislate amends to the reconstruction caps and hasten the projects. The government also must convince people that it will live up to the promise of delivering more than 427,000 housing units around the capital region over the next six years. If its ambitious plans cannot be backed by actions, distrust in public policy and uncertainty in the market will persist.

Finance Minister Choi Sang-mok rightly said that housing should be provided when and where people want. Any real estate policies aloof to the market and consumer aspirations are bound to fail. The past policies under liberal governments bent on fighting against the market should not be repeated. The government must do its best to stabilize the housing market.