Kim Yun-duk, Minister of Land, Infrastructure and Transport, said on the 13th that President Lee Jae-myung recently told the minister, "People should be able to think, 'Has this government gone crazy because it can't build homes?'."
The Minister stated accordingly after the briefing on "rapid supply measures for dwellings to stabilize the jeonse, wolse and sales markets," meeting with reporters at Government Complex Seoul in Jongno-gu, Seoul.
The Minister said the president went on to say, "We need to craft concrete execution plans 'as if wringing a dry towel'." The Minister added, "I believe the Ministry of Land, Infrastructure and Transport (MOLIT) should 'scrape together everything' it can," and emphasized, "We already have volumes under discussion with local governments, and we will work very well with the Seoul city government too."
The Minister also said the minister agrees with the view of Seoul Mayor Oh Se-hoon, who opposed additional greenbelt releases in the Seoul area. However, the minister drew a line, saying, "Saying we will build homes ranks in the third to fourth tier," and "Because we are proceeding mainly in areas already considerably damaged, we are preparing more proactively to supply dwellings."
At the briefing held that day, attendees included the minister, Financial Services Commission Chairperson Lee Eog-weon, Minister of the Office for Government Policy Coordination Im Ki-geun, and First Vice Minister of Strategy and Finance Lee Hyeong-il. At the Q&A session that followed their departure, participants included Housing Supply Promotion Headquarters Director Jeong Woo-jin at the Ministry of Land, Infrastructure and Transport (MOLIT), Housing and Land Office Director Kim Young-guk at MOLIT, Financial Services Commission (FSC) Secretary-General Shin Jin-chang, and Office for Government Policy Coordination Agriculture, Land, and Oceans Policy Director Park Young-du.
The following is a Q&A with them.
─ What are the exact dwelling volumes to be supplied under these measures and the net increase?
Minister Kim Yun-duk said, "The additional supply this time is structured at a total of 230,000 homes plus alpha (+α). Of these, the volume likely to start construction before 2030 is about 120,000 homes. For the 100,000+α homes in newly prepared sites with prime locations, aside from the already disclosed 27,000 homes, the exact number of starts will be identified at the district designation stage due to administrative procedures. Combining the previously announced 1.35 million homes with the Jan. 29 measures and these measures, the government is now preparing a massive volume exceeding 1.5 million homes."
─ Why weren't the 73,000 homes in newly announced housing sites disclosed in detail today? Were greenbelt-release areas included in these new sites?
Minister Kim Yun-duk said, "The 73,000 homes are volumes for which consultations with local governments have already been completed and actual progress is confirmed, but administrative procedures remain, so details will naturally be disclosed once those are finished. Because the market can react sensitively to greenbelts, we are approaching them cautiously; please understand this is not due to lack of content but only a delay in the timing of disclosure."
Deputy Minister Jeong Woo-jin said, "The sites released today fall under the resident perusal process in the Public Housing Act, and prior procedures such as preparing related documents and consultations with related agencies are required, so we cannot announce immediately just because we have agreed with local governments. We will shorten procedures as much as possible and announce quickly. In principle, easing park/green standards within greenbelts does not apply retroactively, but if plan changes occur during project progress, there is room for later application to existing project sites."
─ Why were supply plans through the Yongsan Park site or greenbelt releases within Seoul excluded from today's announcement?
Deputy Minister Jeong Woo-jin said, "Even if the Seoul greenbelt is agreed with local governments, external disclosure under the Public Housing Act is not possible until the official announcement, so we ask for your understanding that it is difficult to answer specifically. As for Yongsan Park, we see a need to supply dwellings, but we cannot proceed without consultations with the Seoul city government, so we will actively consult.
For the Yongsan International Business District, we are continuing consultations with the Seoul city government through multiple channels; while there are differences, we are narrowing them, and the city also agrees on the need for expedited progress. For Taereung, consultations with related ministries including the Ministry of National Defense have been elevated to a meeting chaired by the prime minister and are being pushed actively, with the start of construction moved up to 2029 from the original plan. For Gwacheon, because the relocation site for the racetrack is scheduled to be released by September under the supervision of the Ministry of Agriculture, Food and Rural Affairs, there are no inter-ministerial disagreements, and we will work to persuade the Gwacheon city government, which has raised traffic concerns, with preemptive traffic-improvement measures."
─ Sites previously mentioned, such as the Naegok-dong reserve forces training ground and the Suseo railcar depot, were also left out of today's announcement.
Deputy Minister Jeong Woo-jin said, "Although these areas have been widely mentioned in the media, even referring to whether they are under review would violate the law, so we ask for your understanding that it is difficult to answer in detail."
─ Is it realistic to shorten the period from announcing candidate sites to starting construction from the existing 68 months to 37 months?
Deputy Minister Jeong Woo-jin said, "The proposed 37 months is a standard model. If residents strongly oppose, some variation may occur. Still, we plan to prepare incentives such as cooperation bonuses to encourage active participation in compensation talks. Through this, we will work to minimize opposition."
─ If the Land Compensation Act is revised to allow replacing surveys with objective data when landowners refuse surveys or to reduce the consultation period to 30 days, won't that infringe on landowners' property rights or cause delays due to lawsuits?
Minister Kim Yun-duk said, "When amending a law, I think there can be principles and realities. The aim is clearly to proceed with speed, and I do not think it will have a major impact on private property rights. However, because there is a chance it could be pushed excessively, careful consideration is needed in actual operations. Cases where the compensation period becomes shorter are generally those where compensation proceeds well, and we will push ahead with speed to prevent the problem of a small share of project sites continually delaying and holding back the entire project."
Deputy Minister Jeong Woo-jin said, "For substitutions when surveys are refused, there are procedures in the subsequent appraisal and negotiated purchase stages to correct errors, so there is no need for great concern. The current Land Compensation Act already sets the consultation period at 30 days or more, so the legal provision itself is not changing. In practice, LH has operated with 60 days; we are pulling it back to 30 days. More important than the period itself is how actively the project implementer explains to and negotiates with the landowner. LH will投入 more personnel and negotiate proactively."
─ If jeonse deposits of tenants participating in the safety trust are managed publicly, gap investing effectively becomes difficult. Did the government also intend a gap-investment suppression effect?
Minister Kim Yun-duk said, "We prepared the safety trust after much thought and discussion. A poll showed that landlords see the advantage of earning stable income, while tenants see the advantage of reliability with no fear of jeonse fraud. Our survey found roughly 20% expressed willingness to participate. While not decisive in the overall market, it will account for a considerable portion and help stabilize the jeonse market, and I think it will also indirectly curb gap investing to a significant extent."
─ You say returns from investing in projects guaranteed by HUG will be provided to lessors. What is the basis for the 4%–5% return?
Deputy Minister Kim Young-guk said, "This is not from a public poll; we asked landlords about their willingness to participate if a 4.45% return condition were offered. Landlords who expressed willingness cited low risk and guaranteed income as key reasons, while tenants benefit from no fears of jeonse fraud and landlords not needing to enroll in lease-deposit return guarantees. This return is determined by the PF guarantee and lending rate (in the 4%–5% range) that arises in a structure where the safety trust invests in loans for which HUG provides PF guarantees; tax benefits are also under continued discussion. Considering that the average jeonse-to-monthly conversion rate for Seoul apartments is around 5%, this is sufficiently competitive."
─ In the past, the Financial Services Commission chair said real estate and finance would be insulated. Don't these measures represent a retreat from that insulation stance?
Chairperson Lee Eog-weon said, "Our financial policy stance on real estate policy has consistently been to thoroughly block speculative demand, support dwelling supply, and provide pinpoint support for end users. At the latest town hall, many also called for blocking speculative demand while protecting end users. Unlike when the total volume of household debt was set, conditions have changed, including improvements in the current account and increased transactions after the temporary easing of heavy taxes on multiple-home owners. Taking into account year-end demand for balance-payment and relocation loans, we readjusted the total volume from 1.5% to around 3%. While maintaining unwavering regulation by price through LTV and DSR, we will resolve end-user difficulties with pinpoint support."
Minister Kim Yun-duk said, "While the insulation principle is clear, we judged that finance for new construction supply is closer to productive finance than real estate finance, so for these supply measures we instead provided aggressive financial benefits. Because jeonse and wolse issues are serious, we are expanding financial and tax support to increase non-apartment supply such as officetels, and we see this as also connected to productive finance that vitalizes the construction economy. We will also expand incentives step by step to bring supply forward."
─ There are concerns these measures could needlessly stoke the market or keep weak project sites alive, inflating presale prices.
Chairperson Lee Eog-weon said, "These measures target urgent areas where effects can appear immediately. Housing starts for apartments in the capital region averaged 185,000 over 10 years but fell to 136,000 in 2022 and 108,000 in 2023, and this year's move-ins are 105,000 versus the 10-year average of 183,000—an extraordinary period. We are not creating new projects but speeding ongoing PF project sites. For normalized sites, we will expand PF public guarantees; for distressed sites, we will use the normalization fund to revamp business and debt structures and shift them to starts. The temporary relaxation of capital-adequacy rules is limited to residential project sites until 2028 to minimize side effects."
Minister Kim Yun-duk said, "We see this as starting from a situation where supply was constrained for years by rising material costs and PF tightening. These measures will swiftly provide affordable dwellings in pinpoint fashion and in large volumes to young people, newlyweds and those without homes, and in the longer term expand general dwelling supply. We believe we have increased the chances of stabilization through financial and tax support and greenbelt releases. While it is true the market questions whether policies of unprecedented scale will actually be carried out, the Taereung project released in the Jan. 29 measures has already passed review by the Cultural Heritage Committee and is proceeding steadily, so we ask for trust."
─ At large complexes nearing move-in, there are complaints that bank loan limits are insufficient, loans are first-come, first-served, and if you can't reach a loan consultant you can't get a loan.
Secretary-General Shin Jin-chang said, "When expanding the total volume to around 3%, we set the level considering move-in volumes through year-end and relocation demand, so there should be no inconvenience with move-ins within the increased total volume. With today as a starting point, adjustments will be communicated across the entire financial sector, and at tomorrow's expanded household debt review meeting chaired by the Financial Services Commission chairperson, we will explain the total-volume adjustment plan to banks and all secondary financial institutions. On-the-ground inconveniences should be resolved quickly."
─ Are there plans to improve or change the direction of the loan-management method itself, the total-volume system?
Secretary-General Shin Jin-chang said, "We regret that inconveniences arose in loan handling during total-volume management. However, given the current real estate market conditions and the high household-debt ratio, total-volume management is unavoidable. The government should, of course, adjust the total volume flexibly and reasonably as conditions change, but we judge it is still too soon to decide not to manage the total volume at all."
─ Regarding seed capital for the project-finance (PF) normalization fund, since bad-debt balances and ratios vary by financial sector, will you consider each sector's capacity when matching fund commitments?
Secretary-General Shin Jin-chang said, "The first normalization fund raised 1.1 trillion won, of which 730 billion won was invested, leading to groundbreaking for about 3,300 residential project sites. We are now increasing the operating size to 3 trillion won. Through the PF soft-landing, the overall PF balance fell from 231 trillion won in 2023 to 169.8 trillion won as of the end of March this year, stabilizing overall, but some sectors still carry distressed project sites. Of the 3 trillion won, 1.5 trillion won will be fiscal funds and 1.5 trillion won will be from private financial sectors, and as project profitability improves, private participation should increase. We have not set separate commitment targets by sector or company, but since more private than fiscal funds were raised in the first fund, we expect active private participation this time as well. We will review, within bounds that do not undermine soundness, to ensure operational regulations such as limits on securities holdings do not become obstacles."