At a public debate on real estate policy presided over by the Ministry of Land, Infrastructure and Transport, participants called for easing lending and construction regulations to increase non-apartment supply such as villas and urban lifestyle dwellings. They also argued that lending rules should be revised separately so that urban renewal projects such as redevelopment and reconstruction are not delayed by difficulties in securing relocation funds.
Kim Deok-rae, senior research fellow at the Korea Housing Institute, said at the "Listening forum on plans to expand housing supply for stabilizing people's housing" held at Jeongdong1928 Art Center in Jung-gu, Seoul, on the 14th that as financing for non-apartment operators has become more difficult, business sites have halted and supply has decreased.
Kim said that the lower loan-to-value (LTV) ratio for mortgage loan after the expansion of regulated areas is constraining non-apartment supply. He said, "There is a need to resolve the problem of the LTV being sharply reduced due to designation as a regulated area." Kang Gyeong-hun, CEO of Jingyeong Construction, also said, "Capping the loan LTV for non-apartment operators at 40%, the same as apartments, is excessive."
There were also opinions that non-apartment construction standards should be revised to reflect reality. Kim said, "The current floor and gross floor area standards for multi-family and row dwellings do not properly reflect market conditions," adding, "The relevant standards need improvement." He also said it is necessary to consider excluding newly built non-apartments that meet certain requirements from the housing unit count.
Seo Mi-suk, a Yonhap News reporter, said, "Non-apartment housing starts fell about 72% in four years, from 110,000 units in 2021 to 31,000 units last year," and argued that tax support for private rental housing should be reconsidered.
Seo said, "Since the Sept. 13, 2018, measures, tax benefits for rental business operators have been greatly reduced," adding, "We need to create incentives for private rental business operators to supply dwellings so that the number of newly built rental homes for low-income residents can increase."
Calls also continued to ease regulations on private urban renewal projects such as redevelopment and reconstruction. Oh Hyeon-seok, head of the cooperative for Garibong District 1 in Guro-gu, Seoul, argued that the mandatory ratio of rental housing in redevelopment projects should be adjusted according to regional and project conditions. Oh said, "The public buys an 800 million won rental unit that costs 800 million won to build for 150 million to 200 million won," adding, "The more rental housing we supply, the more losses the cooperative incurs."
Kim Myeong-hui, chairperson of the residents' representative council for Singil District 2 in Yeongdeungpo-gu, Seoul, said, "We have been unable to find a financial institution willing to offer relocation loans, putting residents' relocation and the project timeline at risk of delay," adding, "Since relocation funds are not for speculative home purchases but to secure temporary housing and return tenants' deposits, they should be managed separately."
Kim Hyo-seon, chief real estate expert at KB Kookmin Bank, argued that the method of public contribution should be applied flexibly, given that soaring construction costs have undermined the profitability of renewal projects. Kim said, "What matters is how to shore up project viability in a situation where construction costs have risen sharply," adding, "It is necessary to apply different public contribution methods depending on regional and project conditions."
There was also a proposal to increase the utilization of semi-industrial zones and idle land in urban areas. Park Cheon-gyu, head of the Housing and Real Estate Research Division at the Korea Research Institute for Human Settlements (KRIHS), said, "Areas such as semi-industrial zones have legal room to raise floor area ratios," adding, "Game-changing changes are needed, such as converting them to residential use or adjusting floor area ratios."
Kim Yong-jin, head of REITs Division 1 at Korea Land Trust, pointed out that conflicts between the central government and local governments over idle land development could delay housing supply. Citing the United States' Housing Supply Promotion Act as an example, he said, "If local governments streamline permitting to increase housing supply, additional fiscal support is provided from a separate fund," adding, "Korea also needs such incentives."
Minister Kim Yun-duk of the Ministry of Land, Infrastructure and Transport (MOLIT) said the government would reflect as much of the views raised at the forum as possible in the real estate measures it is preparing.