Empty Public Rental Houses Increasing

There are public rental housing complexes, which were built a year ago, that are still empty.

Initially, the South Korean government planned to construct 1.5 million units of public rental houses by 2017 to stabilize the housing market for low-income families. About 100,000 units of public rental houses will have been built by the end of this year, but those houses may remain empty for the long term.

In particular, the unleased housing is concentrated in local provinces, creating concerns over negative side-effects caused by unreasonable government plans that are not aligned with reality.

According to a report from the Korea National Housing Corporation on the state of public rental houses, out of 341 public housing units in the Mukho complex in Donghae, Gangwon Province, which were completed in July last year, 118 (35%) have not been leased. In the nearby Geonji complex in Samcheok, out of 503 units, 299 or 60% still remain empty. In the Ido complex in Imsil, North Jeolla Province, out of 374 units, 159 units (42%) haven`t been rented yet. Both the Geonji and Ido complexes were completed in December last year.

Recently built public rental houses are also having difficulty finding residents.

The Taejang complex in Wonju, Gangwon Province was completed in April but 402 out of 584 units remain empty, while in Guseong complex in Yongin, Gyeonggi Province, 454 out of 1,556 units remain empty. Rentals in the Okam complex in Mokpo, South Jeolla Province began in September last year and construction will be completed in September this year, but 56 out of 708 units have not been leased yet.

The reason why public rental houses are not leased for the long term is that the government may have built without considering the market.

The government, for its part, has to build 100,000 units annually to achieve its initial goal of constructing 1.5 million units by 2017; thus, apartment blocs are sprouting in small cities or towns in local provinces where there is little demand.

Another explanation for low rental rates is that the Korea National Housing Corporation is looking for cheap sites because the company has gone into debt to pay for construction costs.

If this trend is not reversed, there is a strong possibility that there will be a massive no-rental crisis amid public rental houses. Already, local real estate businesses are having difficulties due to the oversupply of housing by private builders.

Kim Hae-seung, a researcher at the Korea Research Institute for Human Settlements, said, "I agree that we need to increase the supply of public rental houses. But critics say it may not be desirable to press ahead with construction to comply with the timetable."

koh@donga.com