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Shallow housing plan can only deepen issues

Published: 15 Aug. 2024, 20:13

The government unveiled its blueprint to refurbish the first-generation "new towns" of Bundang, Ilsan, Pyeongchon, Sanbon, Jungdong and Sanbon created in the vicinity of Seoul through the 1990s. According to the draft released by the Ministry of Land, Infrastructure and Transport, the redevelopment operation will be expedited from 2027 to give the go-ahead for reconstruction for 88,000 units through 2029 in the hopes of kick-starting work on over half of them by then. The floor area ratio in apartments in Jungdong and Sanbon, currently at 216 percent, will be increased to 350 percent and 330 percent, respectively, to make room for 40,000 additional new housing units.

The ministry will publish its plans for three other new towns to add more than 100,000 new homes in established suburban locations. The measure is aimed at sending a message to the market that the government is serious about meeting its promise to enhance housing supply in and around Seoul to contain the newfound heat in the market.

But haste can make waste. The outline — focusing on increasing housing through redevelopment — left out transportation and other infrastructure details to accommodate an additional 40,000 households in Jungdong and Sanbon, already notorious for traffic congestion. Without a redesign and improvement in road and transportation conditions, living standards could only worsen. Questions are also raised about the feasibility of the plan amid escalated construction outlays from higher labor and material costs. Residents and builders may resist and stall if the economic value pales against the cost.

The speedy operation could in fact end up exacerbating the volatility in the housing market. Apartment and rent prices can shoot up on expectations of redevelopment and moving demand. Once redevelopment in the first-generation new towns starts from 2027, around 20,000 to 30,000 households would have to move out over the next 10 years until their new homes are completed. The ministry envisions a transformation of public rental apartments into high-rises to provide temporary housing until old homes are refurbished. It is considering moving the residents living in public rental apartments to other housing, which sounds ambiguous and insecure.

The government should come up with immediate supply to calm the frantic buying spree due to a housing shortage. But an expedient and hasty outline without thorough research on economic value and infrastructure can only earn scorn for being populist and irresponsible. “Make the City Newer and Living Standards Better,” is the slogan for the operation to refurbish the aged planned cities. Action plans must live up to the motto.