“Excessive supply to downtown Seoul”… At least 3 years for quantity to come out

President Moon Jae-in is speaking at a New Year’s press conference held at the Blue House Chunchu Hall on the 18th. [청와대사진기자단]

President Moon Jae-in acknowledged the lack of housing supply and announced at a New Year’s press conference on the 18th that he would come up with a’special’ supply plan. President Moon said at a New Year’s press conference held at the Cheongwadae Chunchu Hall on the same day, “In the metropolitan area, especially in Seoul, public redevelopment, station area development, and drastic development of new housing sites are achieved by further increasing public sector participation and initiative, strengthening incentives, and significantly shortening procedures “We will increase supply beyond the level expected by the market through such activities,” he said. “The goal is to relieve the public’s anxiety over the lack of supply at once.” This is a more specific and intense supply expansion statement than the New Year’s Address.

However, due to the belated supply expansion, which missed the right time, uncertainty in house and jeonse prices due to lack of housing is expected to continue for the time being. In addition to the 3rd new town, which will be subject to pre-subscription from the second half of this year, the current measures being promoted by Minister of Land, Infrastructure and Transport Byun Chang-heum are public redevelopment, low-rise residential areas, station areas, and semi-industrial development. We are interested in what additional measures will be included in addition to the measures that have been presented so far. These quantities will be completed after 2024 at the earliest. In the meantime, the key is how much to increase the amount of completion during the supply gap for 3-4 years.

Dae-Jung Kwon, professor of real estate at Myongji University, said, “In the mid- to long-term, we need to take measures to stably increase the supply of housing centering on apartments with high preference for housing consumers, but short-term measures to secure insufficient housing are urgently needed before that.”

Main Contents of President Moon’s New Year Press Conference

President Moon said, “Emphasis was placed on speculation (inhibition), but in the end, real estate stabilization was not successful.” President Moon attributed the cause to external factors, such as’surge in the number of households’ and’abundant liquidity in the market’ rather than the failure of real estate policy. President Moon said, “The liquidity of the market has become abundant, and funds are driven into the real estate market. In addition, as the number of households surged, the demand we predicted was further exceeded.”

As President Moon said, the number of households increased from the beginning of the current administration. The annual increase in the number of households from less than 1.5% rose to 1.6% in 2017 and 0.19% in 2018, then rose to 2% in 2019 and 2.7% last year. Heo Yun-kyung, a research fellow at the Korea Institute of Construction Industry, said, “As marriages and divorces have decreased, one of the factors that has increased the number of households is the strengthened tax and loan regulations, etc.” Housing market regulatory units are usually households, so the division of households is less regulated. This is the reason why many analyzes say that there have been many’generational splits’ to avoid regulation.

Housing supply decreased compared to the increase in the number of households. Graphic = Younghee Kim [email protected]

The disagreement in housing supply and demand is expected to continue for the time being. The pre-sale volume of apartments has decreased due to the current government, and the reduction in pre-sale will be seen as a reduction in completion from this year. According to the Ministry of Land, Infrastructure and Transport, the annual apartment sales volume since 2017 is 300,000 households on average, which is 25% less than the previous four-year annual average (400,000 households). Accordingly, the number of apartments expected to be completed is 319,000 units this year and 343,000 units next year, which is 20% less than the annual average (420,000 units) for three years until last year.

The total planned completion of housing, including apartments, estimated by the Ministry of Land, Infrastructure and Transport is 424,000 this year and 448,000 next year. If the number of households increases to last year’s level this year and next year, the shortage of housing will inevitably worsen.

Reporter Ahn Jang-won [email protected]