Stabilization of Housing Prices in Metropolitan Area – Merits

Although the development of five new cities such as Budang, Ilsan, Pyongchon, Sanbon, and Jungdong, in the metropolitan area, which attracted attention due to the improper construction, there are some positive aspects as well because it has paved a new avenue for the city plan such as improvement of the housing supply rate, stabilization of housing prices, and the creation of comfortable living environment.

However, since the development was not pushed forward under the long-term plan, the development plan, which was improvised according to the political purpose, has brought about various negative side-effects as well.

- Merits of the early development: The biggest merit of the development is its contribution to the stabilization of housing prices. It is evaluated that it has played a definite role to settle the housing prices in the metropolitan area and fluctuation of deposit money for the lease of a house, by supplying 300,000 housings in a short term. It also had far-reaching effects in terms of economy. According to the `research on the comprehensive evaluation and analysis of the new cities in the metropolitan area` by the Korea Land Corp., the construction of the five new cities has brought about effect on production inducement amounting to 31 trillion won, and the value added amounting to 12 trillion won. Moreover, the construction provided job to 1.74 million people including the construction workers. It cannot be overlooked that the construction has also changed the housing industry to the competition system, and has provided the expanded range of housing selection to the consumers.

- High degree of satisfaction with residence: According to the Korea Research Institute For Human Settlement, 75 percent of the respondents said `very satisfied` or `a little bit satisfied` in Bundang. The degree of satisfaction with residence was 73 percent in Sanbon, 69 percent in Pyongchon, 55 percent in Ilsan, and 41 percent in Jungdong, which are higher than the existing cities. It was analyzed that the higher degree of satisfaction with residence was due to the well-planned network of roads and the cultural facilities since they are planned cities.

- Negative side effects: The biggest flaw is that the new cities cannot function as self-sufficient cities because of the commercial site, which was excessively allotted to compensate the development cost, and the failure of hosting originally planned business facilities. The new cities became bed-town for those who work in Seoul since there are no production facilities in the new cities. Improper construction was incited due to the shortage of materials and human resources since many housings were constructed during a short-term period. Moreover, the new cities are pointed as principle troublemaker of the rise of sale prices in new apartments since 1990s because the wage of the construction workers and the prices of land in the metropolitan area increased due to the construction of the new cities.

As the commercial area began to develop along with people`s move into the new cities, love hotels, adult nightclubs, and small bars are jumbled up close together. This is one of the factors of residents` complaints. It is also problematic that the phenomenon of the development difficulty is occurring around the new cities because the apartment complexes have sprung up following the rapid urbanization of the rural communities nearby the new since the construction of the new cities.

jinhup@donga.com