9.7 Evaluation of the Housing Supply Expansion Plan and suggestion of supplementary matters
Publication Date 2025-09-28
Researchers Housing and Urban Task Force
On September 7, the government announced the "Housing Supply Expansion Plan" (hereinafter referred to as the September 7 Measures) to respond to concerns about a shortage of housing supply in the market and to prepare a stable housing supply environment.
- The supply (construction) target reached an annual average of 270,000 units and a total of 1.35 million units over the next five years, which is expected to resolve the supply shortage.
- In particular, by designing the roles of the public and private sectors in harmony, three types are presented: ① (public-led) expansion of public roles, ② (public-private cooperation) legal and institutional support, and ③ (private-led) deregulation and support.
- Specific measures include ① expansion and earlyization of housing supply in the metropolitan area, ② expansion of housing supply in the city center, ③ improvement of private housing supply conditions, and ④ establishment of demand management and transaction order
Expansion and Early Supply of Housing in the Seoul Metropolitan Area" aims to accelerate the experience of supply through direct implementation of LH in housing construction projects in the Seoul metropolitan area, land efficiency, conversion of non-housing land → housing land, and visualization of sales."
- Through this, it aims to start construction of 37.2 million units, 12.1 million more than the expected construction volume of 251 million units for public housing in the Seoul metropolitan area between 2026 and 2030.
- However, the actual net increase is limited and there is a possibility that the incentive to participate in the private sector may decrease due to construction delays and financing risks.
- Therefore, it is necessary to strengthen private incentives such as risk hedging and incentives in the process of improving procurement conditions and construction, and to secure additional construction volume, it is necessary to improve public business conditions (reorganize LH contract structure and convert non-construction construction), and to gradually increase new public housing sites and present roadmaps.
Expansion of Housing Supply in the City" is a plan to revitalize housing construction by utilizing old and idle sites, revitalizing maintenance projects, and reorganizing the system."
- The amount of construction is expected to be secured over the next five years through this plan, reaching about 403,000 units.
- As a result of the analysis of ways to expand housing supply in the city center, mid- and long-term effects are expected, while short-term effects are expected to be limited, and market stability effects are also more likely to appear in the mid- to long-term than in the short-term.
- To compensate for this, it is necessary to improve the public nature of private implementation, improve the city's public housing complex system, establish a master plan for old planning cities, induce integrated maintenance by selection, and improve additional system maintenance, supplement concerns about side effects of maintenance (expanding support for migration funds and drawing public rental housing), ease the obligation to green parks, and improve delays in litigation.
'Improving private housing supply conditions' improves unreasonable regulations raised and strengthens incentives for private participation.
- It is expected to promote construction and increase short-term supplies by rationalizing licensing, expanding PF guarantees, incentives for early construction, and expanding short-term supply of non-apartments, but there are concerns about limited profitability improvement, increased financial burden, lack of preference for non-apartments, and supply constraints.
- As supplementary measures, long-term regulations such as integration of development profits, easing the burden of school land, flexible use areas, revitalizing modular and new construction methods (improving legal systems, licensing, and performance standards), and expanding public-supported private leases (urban and youth-specific).
"Establishment of Demand Management and Transaction Order" designs a supply-demand balance adjustment mechanism to increase the effectiveness of supply expansion.
- The government immediately strengthened LTV in regulated areas, restricted rental businesses' LTVs, unified lease loan guarantees, and expanded the authority of land transaction permits, but monitoring is needed to prepare for balloon effects in unregulated areas and instability in the rental market.
- It is necessary to establish the principle of division of roles and long-term operation between LTV, DSR, and guarantees as a mid- to long-term improvement plan, reorganize the regulatory area system in the direction of minimizing duplication and unifying, and strengthen AI-based abnormal transactions prevention and investigation automation.