More New Towns in Seoul Metropolitan Area

The government has decided to establish 3 or 4 more new towns in the Seoul Metropolitan area within the next 10 years. In addition, it plans to build 1.5 million public apartments that will be rented to people for 10-30 years, starting from this year until 2012.

Construction and Transportation Minister Choi Jong-chan submitted a report on a measure for housing stability among people in the lower and middle classes Wednesday to President Roh Moo-hyun. The president visited a public rental apartment complex in Uiwang, Gyeonggi Province.

According to the measure, the Ministry of Construction and Transportation (MCT) will build 3 or 4 more new towns apart from the 4 that are currently under construction in Pangyo, Gimpo, Paju, and Whaseong. The ministry may establish new towns near large cities in other parts of the country, if necessary.

The MCT will construct 1.5 million rental apartments by 2012 and expects to rent out 1 million of them for as long as 30 years and 500,000 of them for 10 years.

The ministry is also set to increase financial aid in constructing small-sized public rental apartments from the current 30 percent of the sales price to 40 percent. Accordingly, those who rent apartments will have to pay an average of 4.54 million won for the deposit, down from the current average of 9 million won.

The MCT is poised to provide residential sites for 60-85 percent of the cost needed to develop in order to encourage private companies to build rental apartments. Moreover, the government will support the construction cost at an interest rate of 3-4.5 percent, if apartments are rented out for 10 years of the mandatory rental period and those who rent them will pay for 20 years.

The ratio of public rental sites that will be built inside public residential sites will be raised from the current 20-30 percent to 40 percent in order to secure more construction sites.

Out of 60.1 trillion won for the construction of rental apartments, 48.3 trillion won will come from the National Housing Fund and 11.4 trillion won from the national treasury.

The project to improve old residential areas, scheduled to be completed by next year, will continue, the ministry said.

The Ministry of Construction and Transportation will find 430 more old residential areas in the second half of this year, gradually reconstruct 110,000 households by 2009, and lower the interest rate for housing renovation to 3 percent from the current 5.5 percent.

Jae-Seong Hwang jsonhng@donga.com