Public rental homes in short supply as construction starts halved in a year

The supply of public rental housing is also plummeting as high-interest rates and rising construction costs are putting pressure on builders. The housing safety net for young people and low-income households is being shaken wildly.

According to the Seoul metropolitan government on Sunday, only nine sites (3,099 rooms) received construction permits for 'affordable youth homes’ last year, which are supplied at about 90 percent of the market price. This is less than half of the 23 sites (6,591 units) in 2022. Compared to two years ago, in 2021 (44 sites, 16,089 rooms), the number has shrunk to one-fifth.

Other public rental housing projects are also experiencing suspensions or delays of projects across the country. According to the land, infrastructure, and transport ministry, construction was started for 7,398 public rental housing units by the Korea Land and Housing Corporation (LH) and provincial governments last year, down 53.2 percent from 2022 (15,815 units). Pundits have also pointed out that the government's plan to revitalize rental homes supplied by private companies, which was included in the Jan. 10, 2024 Supply Plan, has been difficult to implement as planned.

"It is necessary to introduce incentives for builders to ensure the supply of rental housing by using financial resources such as the National Housing and Urban Fund," said Song In-ho, the Economic Information Center chief at the Korea Development Institute.


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