On the 14th, President Lee Han-jun of the Korea Land & Housing Corporation (LH) said that, regarding LH shifting its projects from selling public housing sites to private developers to direct implementation, "expanded fiscal support from the government and backing for the corporation's organization and workforce are urgent."
At the Land Infrastructure and Transport Committee's audit at the National Assembly in Yeouido, Seoul, on the morning of the same day, in response to a question from People Power Party lawmaker Jeong Jeom-sik that "market concerns are high about whether there is room to push for strengthening public interest when LH's liability is not light," Lee answered, "Due to the surge in loss-making rental housing and the decline in land sale revenue, it is expected that we will not be able to maintain the cross-subsidy structure that has driven public housing supply and balanced regional development."
Through the Sept. 7 housing supply measures, the government previously announced a policy to expand LH's role by having LH directly implement, rather than sell, the housing sites it has prepared to private developers, and to break ground on 75,000 units by 2030.
Lee said, "Expanding direct supply is an inevitable choice to strengthen the public nature of the public housing market and achieve balanced development," adding, "If the public entity LH directly implements, it can achieve the government's goal of strengthening public interest, but without fiscal backing from the government, it will face considerable difficulties."
As of June this year, LH's liability stood at 165.0206 trillion won with a liability ratio of around 222%, but when a point was raised that by 2029 it is necessary to consider the possibility that liabilities could exceed 300 trillion won, Lee explained, "If LH directly implements, instead of selling to the private sector, the land to be sold, the supply increases by 53,000 units, and to break ground, it costs a little over 20 trillion won in total, at 400 million won per unit," adding, "Overall, bond issuance is expected to increase by about 25 trillion won over five years, but since land sales are not happening, our own revenue structure disappears, so we are consulting with the LH Reform Committee on how to resolve this."
He continued, "LH designates the development of new towns or housing sites in specific areas and supplies dwellings to these areas," adding, "When the first- and second-phase new towns were built in the past, dwelling supply was insufficient, so many people moved and bought homes from the perspective of homeownership, but now there are a certain number of homes in the Seoul metropolitan area. LH should establish development plans so that demand can easily approach the dwelling complexes created by LH."
Meanwhile, Kim Gyu-cheol, head of the Housing and Land Office at the Ministry of Land, Infrastructure and Transport, said, "The public-led direct implementation policy is a realistic alternative that can enhance supply stability and effectiveness," adding, "To achieve the goal of supplying 1.35 million households, a parallel strategy with LH and private companies, expansion of personnel and organization, making the price ceiling system and standard unit costs realistic, and securing fiscal soundness are all necessary."