After the government decided to supply 60,000 homes in Seoul, Gwacheon, Seongnam and elsewhere—twice the size of the Pangyo new town—real estate markets said the government "mobilized every method it can." Analysts said it showed policy resolve to use most of the land that can be supplied as residential land. But many experts said it will be hard for the policy to materialize quickly because construction and move-in are expected to take at least seven to eight years, and local governments and nearby residents are likely to mount strong opposition.
◇ "Securing supply sites with our best efforts"
Experts give high marks to the government for showing policy resolve to supply the largest possible volume in locations sought by genuine end users. Kim Jin-yu, a professor of urban transportation at Kyonggi University, said, "These are measures the market had already anticipated, and I assess that the government did its best in its own way."
Ham Young-jin, head of the real estate research lab at Woori Bank, said, "The intent of the policy is clear," adding, "It aims to curb speculative excess demand driven by fears of a supply shortage and to stabilize home prices by addressing the structural shortage of dwellings," and "the clear direction of an active dwellings-supply policy is positive."
Ham said, "The idea of supplying dwellings for tens of thousands of households by using idle sites in core locations in Seoul—such as Yongsan International Business District, Camp Kim, Taereung Country Club, Seoul Medical Center, the Gwacheon racecourse, and the Defense Security Command—squarely targets structural market issues like preference for top-tier areas by increasing supply where demand is concentrated," and projected that the government's site choices will satisfy the needs of genuine end users.
◇ Limits hinge on resident pushback and whether local governments agree
There is also widespread concern about opposition from local governments and residents. If public rental dwellings for young people are built on land secured through this supply plan, resident backlash is expected to be fierce. Many view rental dwellings as undesirable facilities, making a NIMBY phenomenon likely.
In announcing the plan, the government did not specify the scale of public dwellings. But in explaining the policy direction, it said, "We will focus on supplying quality dwellings at affordable levels so that more younger generations can dream of the future and form families without housing worries." It also signaled that detailed plans for young people, including a supply plan for the youth, will be released in the first half of this year through housing welfare initiatives.
The problem is that resident backlash could grow, increasing the likelihood that local governments will oppose the plan. Shim Hyeong-seok, head of the Udabang Research Institute and a professor at IAU in the United States, said, "The Moon Jae-in administration also tried to use idle land and aging government buildings, but strong opposition to public sales at the time meant projects did not progress properly," adding, "This time, public rental dwellings for young people are expected to be expanded, which will trigger even greater backlash than in the past."
Yang Ji-young, a senior manager in the asset management division at Shinhan Investment Corp., also said, "Resistance to rental dwellings will be considerable in those areas," adding, "If there is no agreement with local governments, delays to win them over will be unavoidable." Yang added, "Some large-scale dwellings supply areas will also see side effects like traffic congestion, so those aspects must be coordinated as well."
Pushback from local governments has already become reality. In a statement released on the afternoon of the 29th, the Seoul Metropolitan Government said, "We express deep concern that the measures announced today exclude the minimum preconditions the city proposed for the swift supply of dwellings." It also criticized, "The government announced sites for 32,000 homes without sufficiently reflecting the city's concerns and views."
On the Yongsan International Business District, it said, "The government proposed 10,000 homes, but the city has argued for a maximum of 8,000," adding, "This is to manage the residential ratio in the area at an appropriate level (within a maximum of 40%) and to create a quality residential environment so it can maintain its function as an international business district." Regarding the Taereung Country Club site in Nowon District, it said, "Although it was pursued as part of the Aug. 4, 2020 measures under the Moon Jae-in administration, the housing supply effect is insufficient relative to the area of the greenbelt to be lifted, making it hard to ensure effectiveness."
Gwacheon, which includes the racecourse and the Defense Security Command sites in this dwellings supply plan, is also opposed. On the 23rd, Gwacheon Mayor Shin Kye-yong said, "Gwacheon is already undergoing development that exceeds the capacity of the city's infrastructure," adding, "We stand with citizens in clearly opposing any additional designation of dwellings supply sites in the area."