Seoul Mayor Oh Se-hoon said on the 29th, "Real estate prices cannot be solved by supply alone, but the most important cause is the imbalance between supply and demand," adding, "Because the consistent outlook that new dwellings will be in short supply over the next 10 or 20 years has kept stoking home prices, policies such as the Rapid Integrated Planning 2.0 being announced this time will play an important role in stabilizing real estate prices."
On the morning of the 29th at Seoul City Hall in Jung-gu, Seoul, Mayor Oh held a press briefing on Seoul's dwellings supply measures and announced "Rapid Integrated Planning 2.0," which includes shortening the redevelopment project timeline by up to 6.5 years.
Mayor Oh said, "The key to solving Seoul's dwellings supply problem is private-sector-led redevelopment, especially supplying sufficient dwellings in major areas including the three Gangnam districts," and added, "By fully rolling out Rapid Integrated Planning Season 2, we will dramatically accelerate the supply pace to deliver palpable dwellings supply across Seoul and achieve real estate market stability."
Through "Rapid Integrated Planning 2.0," the city plans to start construction on a total of 310,000 homes by 2031. By 2035, 377,000 homes will be completed. In particular, by concentrating 198,000 homes—63.8% of total groundbreaking volume—in high-demand areas such as the Han River belt, the city aimed for tangible home price stability going forward. The city believes that, when adding sites awaiting designation as redevelopment zones, small-scale projects such as "Moa dwellings," and remodeling volume, it will be possible to supply up to more than 390,000 homes by 2031.
◇ The following is a Q&A with Mayor Oh and Choi Jin-seok, Seoul's dwellings bureau chief.
—Supply areas are concentrated in the Han River belt and the three Gangnam districts. There are concerns that because demand is already concentrated there, a large-scale supply could spur investment sentiment and make home prices even more unstable.
Mayor Oh: "In the short term, we cannot completely rule out the possibility of such a phenomenon. However, in the end, prices are formed by the balance of supply and demand, and if supply falls short of demand, prices are bound to rise. Real estate prices are not solved by supply alone, but the most important cause is the imbalance between supply and demand. Because the steady outlook that new dwellings will be in short supply over the next 10 or 20 years has continued to stoke home prices, we expect the city's efforts to play the most important role in stabilizing real estate prices."
—Under the government's Sept. 7 measures and the plan to break ground on 1.35 million homes, the goal was to start 334,000 homes in Seoul by 2030. However, the city set a different goal period that is one year longer and a smaller number of 310,000 homes. What criteria did you use to calculate this?
Mayor Oh: "There are 432 zones already designated as redevelopment zones where projects are underway. Some zones are also awaiting designation under Rapid Integrated Planning. The figure of supplying 310,000 homes by 2031 was calculated as the number Seoul can handle if the volumes in these two categories proceed at the pace announced today."
—Excluding Gangnam District, which is already designated as a land transaction permit zone, there are concerns that areas in the so-called Han River belt such as Mapo, Seongdong, and Yeongdeungpo could see buyers rush in before they are designated as land transaction permit zones, triggering overheating such as panic buying.
Mayor Oh: "The city's position is that there are no plans for additional designations beyond the most recently designated land transaction permit zones. In the last government announcement, the government also said, in coordination with the city, that it would have the authority to expand the designation of land transaction permit zones, and we will keep a close eye on the situation through continued consultations. For now, there are no plans for additional designations."
—Some say that to meaningfully ease regulations on redevelopment, the price cap on presales in the three Gangnam districts (Gangnam, Seocho, Songpa) and Yongsan, where it is in effect, must be relaxed. Are there any consultations with the government?
Choi, the bureau chief: "The three Gangnam districts and Yongsan are designated as speculative overheating zones and adjusted areas, and the presale price cap is in effect there. There are no ongoing consultations at this time."
—Seoul has focused policy on the speed of supply, while the government has focused on curbing demand, indicating different policy directions on dwellings. Is there a risk that conflicting policy directions could deepen market confusion?
Choi, the bureau chief: "The government does its job as the government, and Seoul does its job as a local government. I do not see any particular conflict. I hope you see that we are making our best efforts."
—You said you would focus supply mainly on the Han River belt, but there are concerns that if the government does not ease regulations on the redevelopment excess profit recapture system, redevelopment could stall.
Choi, the bureau chief: "It is true we emphasized the Han River belt, but this policy applies to redevelopment across the entire city of Seoul. We emphasized it because there is high interest in the Han River belt, not because we intend to supply only to specific areas. The recapture system clearly affects Seoul, but it is mainly handled by the central government, so we are watching the situation."