Skepticism grows over effectiveness of third housing plan

The government’s third real estate measure, the Oct. 15 plan, is losing momentum just one month after its launch. After three weeks of slowing growth, Seoul apartment prices widened again in the fourth week following the announcement. Apartments in Gangnam’s three districts and along the Han River belt, in particular, are seeing price increases, with record-high transactions continuing. Although the sharp drop in transaction volume means a small number of high-value trades may have skewed the statistics, making it difficult to label the policy a failure, market anxiety remains evident.

The market’s resistance to even the strictest regulations reflects growing distrust of the government’s commitment to housing supply. When officials announced the Sept. 7 plan to build 270,000 units annually in the Seoul metropolitan area over the next five years, the market response was lukewarm. The hesitation stemmed largely from unclear timing and methods for delivering the housing. Recently, the presidential office called for “desperate housing supply,” and the Ministry of Land, Infrastructure and Transport promised additional measures within the year. However, without market trust, these efforts could prove ineffective.

For supply plans to be more than empty numbers, past failures must be thoroughly analyzed. In 2020, the Ministry of Land, Infrastructure and Transport announced it would build 33,000 homes on more than 20 state-owned or public sites by 2028, including the Taereung Golf Course in Nowon District, the western driving test site in Mapo District, and the government complex in Gwacheon, Gyeonggi Province. In reality, construction began on only about 1,000 units. The Taereung site, which was slated to supply 10,000 homes, was scrapped due to resident opposition, objections from the Defense Ministry, and concerns over cultural heritage preservation.

The problem was that the government announced plans before preparations were complete, claiming to show its commitment to housing supply. Potential issues, such as resident complaints and public institution relocations, should have been carefully reviewed, with alternative plans prepared. Coordination within the government, local authorities, and relevant ministries was also insufficient. This must change going forward. For example, the redevelopment of old public office buildings outlined in the Sept. 7 supply plan will require strong inter-ministerial cooperation to proceed efficiently. The Yongsan redevelopment project, where the government and Seoul city hold differing views on housing scale, will also need proper negotiation. In addition to public supply, measures should be introduced to accelerate private reconstruction and redevelopment projects.

To ease concerns over housing prices, the government’s supply plans must inspire confidence that “housing will indeed increase this time” through concrete implementation strategies. Reviewing and properly executing previously unfulfilled supply promises should be a top priority.