Gov’t to expand public housing sites to boost housing supply

[Photo by Park Hyung-gi]

The South Korean government will supply more than 30,000 additional housing units in the third phase of new towns to boost the country’s housing supply. It will increase the number of potential new housing units to 85,000, 20,000 units more than the current plan, and move up the announcement of new property sites to November 2023.

As the private sector sees a significant supply crunch due to soaring construction costs and difficulties in financing amid a real estate project financing (PF) crisis, the government is determined to resolve the situation by boosting the public sector.

The government held the sixth meeting of real estate ministers at the Government Complex in Seoul on Tuesday and announced a supply plan to stabilize the nation’s housing supply. The measures in the plan include expanding the supply of public housing, including increased supply in the third phase of new towns, revitalizing private supply by improving PF conditions and regulations, and increasing supply of non-apartment residences in the short term.

In the public sector, the government will increase new housing units in the third phase of the new town project by more than 30,000 from the existing 176,000 units. To this end, the new towns will have a bigger floor area ratio and some non-residential sites, such as green areas, will be converted to residential sites.

Other measures to revitalize the supply of private housing include expanding PF loan guarantees. Initially, 15 trillion won ($11.1 billion) worth of PF guarantees was planned for 2023, including 10 trillion won for the Korea Housing and Urban Guarantee Corp. and 5 trillion won for the Korea Housing-Finance Corp., but this amount has since expanded to 25 trillion won. Relaxed screening criteria will also enable private companies that have been struggling to secure business financing to step up their supply. With these measures, the government says that it hopes to supply as many as 1 million units by 2024, going beyond this year’s target of 470,000 units.