South Korea's Real Estate Market: Current Trends and Challenges

Lee Jin-woo emphasizes that stable housing supply is crucial to mitigate real estate market volatility.

### Lee Jin-woo's Update on Seoul's Real Estate Market
Apartment prices in Seoul are still rising a month after the government's real estate measures, causing **market anxiety**. The increase is influenced by factors such as **apartment concentration**, **interest rate cut expectations**, and **supply concerns**. The government is actively implementing follow-up measures and has enacted laws to **expedite redevelopment and reconstruction**, aiming to **stabilize the housing market**.

### Addressing the Housing Market Challenges
The government is focusing on purchasing villas and multi-family houses for rental housing to ensure a **stable supply and mitigate volatility** in the housing market. Efforts are being made to shorten the timeline for reconstruction and redevelopment projects from **15 years to around six or nine years**. The government aims to communicate closely with the National Assembly and other stakeholders to **simplify procedures and resolve obstacles** in the housing development process.

### Addressing Housing Supply and Greenbelt Loosening in Seoul
The government will conduct services related to housing and environmental preservation, taking time to make **comprehensive judgments**. In response to rising housing prices, there are considerations for **loosening the greenbelt** in Seoul, with plans to supply **more residential units**. The government is now aiming to **increase the housing supply from 20,000 to 80,000 units** due to unexpectedly high demand.

### Seoul's New Policy on Non-Apartment Housing
Seoul is implementing measures to boost the construction of villas, with a commitment to **actively purchase these homes** and increasing the average purchase price by **1.4 times**. The policy aims to **acquire over 110,000 units**, focusing on newly constructed rental properties, and will conduct **thorough assessments before building**. LH's debt ratio has significantly decreased, indicating sufficient capacity to **increase the housing supply from 30,000-40,000 units to 12,000-20,000 units annually**.

### Challenges and Initiatives in the Regional Housing Market
The regional housing market is struggling, with a **significant number of unsold newly constructed homes**, leading to corporate restructuring initiatives. A real estate investment trust (REIT) is set to launch in September, aiming to **purchase unsold homes at low prices for rental business**, with a projected yield of **5.5% or higher**. Tax benefits and economic stabilization measures are also being introduced to address the **decline in real estate prices** in regional areas.

### Challenges in Housing Supply Measures
The process of implementing housing supply measures is lengthy and involves **passing bills through the National Assembly**, which is challenging due to **opposition party members**. The special law for maintenance projects and urban regeneration is crucial, with proposed amendments to the **consent rate for reconstruction projects**. The speaker emphasizes the importance of **narrowing down differences in perspectives among lawmakers** and aims to provide signals for a **smooth and realistic housing supply**.

### Current Trends and Challenges in Seoul's Housing Market
* 🏙 "Apartment prices in major areas of Seoul still seem to be **rising**," despite government measures announced on August 8th, indicating **ongoing market anxiety**.
* 📉 Recent analyses suggest that while the rate of increase in prices is **slowing**, concerns about a **supply cliff** and **occupancy cliff** from 2025 are complicating the situation for buyers.
* 🔍 The program will feature an interview with **Kim Heon-jung**, a policy officer from the Ministry of Land, to **assess the effectiveness of recent housing measures**.
* 🏗 Since June, there has been an upward trend in new apartments in Seoul, but prices for non-apartment housing and in regional areas are either **stable or declining**, showing **regional differentiation**.
* 🔄 The government aims to activate redevelopment and reconstruction to ensure a **steady supply of housing**, as there is a belief that **well-located apartments in popular areas** are primarily **rising in value**.
* 🏛 New policies include **increasing the floor area ratio** and **raising public rental housing prices by about 1.4 times** to address construction cost issues and expedite the supply of new apartments.
* 📊 The government plans to supply **more than 80,000 units**, significantly increasing from an initial estimate of **20,000**, to meet the high demand for housing in Seoul.
* 📅 By November, clearer plans regarding housing locations are expected, with an aim for **sales to commence within five to six years**, despite concerns about the **speed of decision-making** in the housing sector.

[손경제] [인터뷰] 8.8 공급대책 이후 한달, 업데이트 (김헌정 국토교통부 주택정책관)｜20240906(금)

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