Gov't plans to build 1.35 million homes in greater Seoul to solve housing crisis

The government plans to break ground on 270,000 new housing units annually in the greater Seoul area through 2030, with the goal of launching construction on a total of 1.35 million homes.

Apartments are seen from Mount Namsan in central Seoul on Sept. 7. [YONHAP]

The government plans to break ground on 270,000 new housing units annually in the greater Seoul area through 2030, with the goal of launching construction on a total of 1.35 million homes.

To ramp up housing supply, the state-run Korea Land and Housing Corporation (LH) will take a more direct role in project implementation. Underutilized land and aging facilities in urban centers — areas preferred by homebuyers — will be actively repurposed for residential development. At the same time, the government will strengthen loan regulations and expand land transaction permit zones to curb speculative demand.

The plan was announced Sunday during a meeting of related ministries, presided over by Deputy Prime Minister and Finance Minister Koo Yun-cheol. The new housing supply strategy is part of a broader set of real estate measures.

Although price increases have slowed in the capital region since new lending restrictions were introduced on June 27, the government assessed that an upward trend persists. Officials said swift action is needed to ease growing concerns over supply shortages.

"While the housing market in the rural regions remains weak — with declining prices and rising unsold inventory — the capital region still faces upward pressure," said Vice Minister of Land, Infrastructure and Transport Lee Sang-kyeong. "Extraordinary measures are needed to boost supply alongside demand-side adjustments in the metropolitan area, along with a focus on recovering demand rather than boosting supply in the rural regions."

Direct construction by LH on public land

The government aims to break ground on 1.35 million new homes in the capital region over the next five years, or 270,000 units annually, based on the actual beginning of the construction rather than permits — a metric officials said better reflects real-world supply.

A major shift is being made in how public housing sites are used. Previously, public land acquired through compulsory purchases was sold to private developers. Now, LH will take the lead in developing these sites directly.

The Junggye Jugong 1st Apartment Complex in Nowon District, northern Seoul, is seen on Sept. 7. [NEWS1]

As part of the shift, LH will halt the planned sale of public housing land to private developers and instead move to carry out the projects directly by revising district plans where necessary. Projects will still involve private-sector participation through contracts for design and construction, but LH will remain the lead developer.

Efforts will also focus on urban infill — using vacant or underutilized spaces in city centers — to meet strong demand for city-center space.

By redeveloping permanent rental housing older than 30 years into mixed public rental and for-sale housing, the government plans to supply 23,000 new homes in the capital region by 2030. Another 28,000 units will be built on aging government office sites and unused state-owned land.

The Junggye Jugong 1st Apartment Complex in Nowon District, northern Seoul, is seen on Sept. 7. [NEWS1]

Target sites for redevelopment include the Sungkyunkwan University baseball field in northern Seoul, a commercial lot in Wirye, southern Seoul, the Korean Educational Development Institute site in southern Seoul and a relocation site for the Gangseo District Council and Gayang annex building in western Seoul.

To support supply through redevelopment and reconstruction, the government will identify new candidate sites through local government proposals and competitions.

Regulations on floor area ratios around subway stations will also be eased by up to 1.4 times under public urban complex projects, which are expected to yield 50,000 new homes in the capital region by 2030.

Loan limits tightened in regulated areas

To suppress demand from speculative investors, loan restrictions will be tightened in regulated areas.

Starting Monday, the loan-to-value (LTV) ratio for household mortgages in speculation-prone zones — including speculation zones, overheated districts and adjustment target areas — will be tightened from the current 50 percent to a new 40 percent.

Apartments are seen from Namsan in central Seoul on Sept. 7. [YONHAP]

The government will set the loan-to-value (LTV) ratio for housing sales and rental business operators to 0 percent — down from 30 percent in regulated districts and 60 percent in nonregulated districts within the Seoul metropolitan area — to restrict mortgage lending.

For jeonse lump sum loans, the borrowing cap for single-home owners will be standardized at 200 million won ($144,000), regardless of which guarantee agency is used. Jeonse is a housing rental system in Korea that works differently from monthly rent. Instead of paying rent each month, the tenant pays the landlord a large lump-sum deposit, typically ranging from 50 to 80 percent of the property’s market value, upfront at the start of the lease.

The authority to designate land transaction permit zones — previously held by local government heads — will be expanded to allow the land minister to designate such zones when necessary. A legislative amendment is set to be introduced to allow this.

The Ministry of Land, Infrastructure and Transport also plans to launch a joint task force with the Financial Services Commission, National Tax Service and Korean National Police Agency to investigate real estate related crimes.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom. BY HONG JOO-HEE [paik.jihwan@joongang.co.kr]