The government has announced a plan to supply 2.7 million homes including 500,000 in Seoul over the next five years.
Under the new plan, the government will also lower the share of safety inquiries on structural safety from 50 percent to a minimum 30 percent, while revisiting the existing reconstruction excess-profit restitution system. However, it remains to be seen whether the new plan will be effective enough given the absence of detailed action plans and the mounting need for revisions that the ruling People Power Party must wade through against the larger opposition parties.
On Tuesday, the Ministry of Land, Infrastructure, and Transport announced a “Plan to Realize Public Housing Stability (August 16 Housing Supply Plan) in conjunction with relevant government ministries. Over the next five years, 1.58 million and 1.12 million homes will be supplied in the metropolitan areas and local provinces, respectively.
The housing plan includes 520,000 units (240,000 for Seoul) in maintenance projects including reconstruction and redevelopment as well as a total 880,000 public housing (50,000 for Seoul) including the third-generation new towns. Land Minister Won Hee-ryong said the main purpose of the new plan is to provide enough housing where there is demand.
The new property planning seeks to ease the regulations on the safety inspections and reconstruction excess-profit restitution system, which have impeded reconstruction projects. Firstly, the share of structural safety inspections will be lowered from 50 percent to 30~40 percent. The current ceiling on reconstruction cost exemption at 30 million won will also be revised upward, with the exacting standards alleviated.
A private urban complex project will be introduced as well where private trusts or real estate investment trusts are involved to develop areas adjacent to stations and semi-industrial districts. The pledged ‘youth housing’ and ‘first home near station’ plans will be integrated to provide a total of 500,000 homes for those without home ownership at under 70 percent of market prices. The plan also seeks to transfer the residents of semi-basement homes to public and private rental houses while offering support for the improvement and repairing of homes.
“We expect to see some positive effect in terms of deregulation and private-led housing supplies,” said Song In-ho, the head of Economic Information and Education Center under the Korea Development Institute. “Given the need for passing the legislations and growing market uncertainties, however, it won’t be easy to deliver 2.7 million homes as promised.”
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