Increased housing supply thanks to the past government, the current government forgot

President Moon Jae-in acknowledged the lack of housing supply at a New Year’s press conference on the 18th and announced that he would come up with a’special’ supply plan. The photo shows an apartment in downtown Seoul. [뉴시스]

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 Chunchugwan on the same day, “In the metropolitan area, especially in downtown Seoul, public redevelopment, station area development, and drastic development of new residential areas are achieved by further increasing public sector participation and initiative, strengthening incentives, and significantly shortening procedures. He said, “We will increase supply beyond what the market expects,” he said. “It aims to relieve the public’s anxiety about the lack of supply at once.” This is a more specific and intense supply expansion statement than the New Year’s speech.
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.”

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 researcher at the Korea Institute of Construction Industry, said, “As marriages and divorces declined, one of the factors that increased the number of households was the strengthened tax and loan regulations under the current government. It is less regulated, which is why many analyzes say that there have been many’split generations’ to avoid regulation.

It is also true that the number of houses completed has increased since 2017, when the current government was established. From 2017 to 20, an average of 547,000 households moved into the country every year. This is 21% higher than the annual average for the previous four years (450,000 households).

However, this is not an increase by the current government, but an achievement of the previous government. This is because regulations have been eased and housing prices have risen in the metropolitan area since 2015, and the housing business has become active, and as a result, the number of pre-sale items has increased sharply. The annual average pre-sale volume of 2013-16 was 450,000 households, a 52% increase from the previous three years.

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 appear 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.

Supply is also unstable after 2023. The number of housing construction permits, which can predict the supply of houses longer than the pre-sale volume, also fell from 700,000 units each in 2015-16 to 500,000 units in 2019 and below 400,000 units last year.

Park Won-gap, a senior real estate expert at Kookmin Bank, said, “The number of new tenants decreases as the number of new occupants decreases and the number of existing houses decreases due to the enforcement of the right to apply for a contract renewal.

Reporter Ahn Jang-won [email protected]