At the "national grand debate on real estate policy" held on the 23rd, opinions diverged between President Lee Jae-myung and real estate experts over the housing supply effect of reconstruction and redevelopment. The president took a cautious stance, saying that even with maintenance projects, the number of households does not increase much or could even decrease. Experts, on the other hand, argued that beyond the supply volume, it is also necessary to consider how much to increase new apartments that people actually want to live in. A "total volume management" plan that would cap the annual volume of maintenance projects to be pursued in Seoul was also proposed.
At the debate held that day at the KBS annex in Yeouido, Seoul, a series of opinions said regulations on reconstruction and redevelopment should be eased to speed up the supply of urban dwellings. However, some attendees pointed out the problem of original residents being pushed out after redevelopment and conflicts among residents during the process.
One resident attendee suggested measures including limiting repeated applications for projects that failed due to resident opposition, strengthening oversight of consent procedures, and preventing the hasty demolition of usable dwellings, citing low resettlement rates of original residents after redevelopment.
The president said, "Reconstruction sometimes increases the number of households, but because the area per household also grows, it does not seem that the total number of households increases significantly," adding, "With redevelopment, it seems typical that the total number of move-in households decreases."
He continued, "While the residential environment improves and higher-quality dwellings are supplied, a significant number of existing residents have to leave, and it also appears that the total number of households may actually decrease," and noted, "There seems to be debate over whether there is truly a new dwelling supply effect in high-density areas."
Real estate experts countered that the supply effect should not be judged by the number of dwellings alone. Kim Je-gyeong, head of Toomy Real Estate Consulting, said, "It is true that the number of households can decrease with redevelopment," but added, "Even if the housing supply rate exceeds 100%, what matters is not the absolute number of dwellings but what kind of dwellings are supplied."
Kim said, "Simply increasing villas and officetels makes it difficult to provide the supply that demanders want," adding, "In the market, the dwellings that attract demand and see prices rise are mainly new apartments. We need to increase the dwellings that people actually want to live in, that is, 'effective supply.'"
Calls also emerged to revise relocation loan regulations that delay maintenance projects. Reconstruction and redevelopment can proceed to demolition and groundbreaking only after members and tenants complete relocation. If relocation loans for association members are restricted because they own multiple dwellings, some members may be unable to move, delaying the entire project.
Kim said, "If we do not lend relocation funds to owners of multiple dwellings, the member in question cannot move, and demolition and groundbreaking cannot proceed," adding, "Rather than raising floor area ratios, reasonably easing relocation loan regulations in line with the characteristics of maintenance projects may be more effective for revitalizing projects."
To reduce construction cost burdens, a plan was also presented for the government or public institutions to purchase and supply major construction materials such as cement and steel in bulk. Opinions also called for supporting project financing (PF) by distinguishing sites that can proceed normally from poorly performing projects.
Concerns were also raised that if regulations are lifted all at once, maintenance projects could concentrate in highly profitable areas such as Gangnam. Lee Gwang-su, head of Gwangsune Real Estate Agency, proposed managing the annual volume of reconstruction and redevelopment that can be pursued in Seoul at a certain level, and granting priority and additional incentives to business sites with large public sale volumes or lower sale prices.
Lee said, "If regulations are relaxed at once, only reconstruction in highly profitable areas such as Gangnam could move quickly, increasing the supply of high-priced new apartments," adding, "If large-scale relocations and housing demolitions occur simultaneously, they could stimulate the jeonsei and monthly rental markets and home prices, so the process should be carried out sequentially."