[Opinion] Newtowns

Choo Byung-jik, the Minister of Construction and Transportation, seems to be beleaguered because of his recent remarks. It is not new that the property prices of newly added new towns are going up. However, the property market has become a total chaos because of Choo’s “surprise announcement.” Contrary to the Ministry of Construction and Transportation’s prediction, the property prices of Seoul and metropolitan areas were rapidly increasing too.

Will it be right to say that the house prices in the metropolitan area will be stabilized thanks to the “new town effect”? Some say that this is impossible. It is because the houses in new towns will be on sale five to six years later from now. Of course there is no denying the fact that merely developing new towns cannot sufficiently satisfy the actual demand. However, development of new towns can curb the speculative investment on houses. It is because people who buy houses for speculative reasons are expecting the house prices to surge in mid or long terms. Also, developing new towns is necessary in Korea since it is the safest way to stabilize the house prices in metropolitan areas in the long term.

The question is “Are the new towns a proper alternative to the Gangnam area, one of the most expensive places in Seoul?” If the relevant officials want new towns to be an alternative to Gangnam, they should be sure that the new towns provide people with various education, cultural, and medical services, just like Gangnam. In other words, they should come up with not just a “new town” but a “premium new town.” For example, the transportation should be good and it should not take long hours from new towns to downtown or Gangnam. This will only make Gangnam more attractive. Unattractive new towns might result in an excess of supply. In some other areas, which are 50-60 km far from Seoul, there are bunch of unsold houses and the housing rate is over 100%.

It is no use if the policies do not work out in the market. If the government wants to stabilize the house prices in metropolitan areas, it should pick the right place to build new towns and provide the people with high quality houses. The southern part of the metropolitan area is the best candidate for new towns. That part is even close to Gangnam. There are some people who say that the government should cut the red lines in Gwacheon, Anyang, Hanam, Gwangju, and Seognam Seoul airport. Some experts say that since finding new land is difficult, the floor space ratio should be relaxed and more households should be supplied. It is time for the government to listen to the experts. Also, it will be important to bring about supplementary measures to prevent developments thoughtless of the environment.

Heo Seung-ho, Editorial Writer, tigera@donga.com