New city secrecy stimulates speculation…40-year-old recipes called LH crisis

“You have to be severely punished.” The government and the politicians began to scream with one voice over the allegations of speculation by the Korean Land and Housing Corporation (LH) employees of the planned land speculation of the Gwangmyeong Siheung new city.

Following President Moon Jae-in’s order on the 4th to “should be in the face”, Hong Nam-ki, Vice Prime Minister and Minister of Strategy and Finance, said on the 7th that “there will be untolerant measures.”

Legislators of the ruling and opposition parties have been fiercely submitting a bill to the National Assembly that strengthened supervision and punishment. Currently, when a person working for a public housing business operator, the Ministry of Land, Infrastructure, or other related agencies, such as local governments, uses the information learned during business processing other than the purpose of designating a district or proposed designation, or providing or divulging information to others. They are subject to imprisonment for not more than five years or a fine of not more than 50 million won.

According to the bills submitted, the scope of the punishment for information leakage will be extended to those who have worked or are engaged in related organizations or businesses, and those who have received undisclosed material information. The President of LH conducts regular surveys and discloses the overall housing and land transactions of all employees and executives once a year. If the information is used for other purposes, provided or disclosed to others, imprisonment for one year or more, or a fine equivalent to 3 to 5 times the amount of profits obtained from the offense. Imprisonment and fines can be imposed, and profits obtained through speculation are confiscated or collected.

It is a sad punishment, but will it be a fundamental measure? This situation is often said to be the case of entrusting fish to cats. Wouldn’t a cat go up to the kitchen just because he left the fish and screamed?

The’secretism’ of new city development made the smell of fish even more pronounced. The development of the new city becomes a’golden egg’ thanks to the development of a land that is difficult to sell and doesn’t cost much money. Even if the compensation is set at a slightly lower appraisal amount than the market price, it is a chunk of money that could not be expected before development. Compared to the end of 2015, land prices in Gyeonggi Province and Siheung City rose by 20% and 18%, respectively, compared to the end of 2015.

The planned new city will be treated as a secret until the public announcement of the target site, which is announced by the government at the same time. The law also stipulates that “it is necessary to take necessary measures to prevent the leakage of related information until a public announcement to listen to opinions of residents, etc.”

For the purpose of preventing speculation, it is kept secret until it is disclosed through public inspection, but secrecy has a side that encourages more speculation. This is because if it is developed as a new city, it is a’big hit’. The more you hide, the greater the temptation to know.

It is necessary not to announce one day, but to develop the housing site intentionally through the national land plan. ‘Openism’ may be more effective in blocking speculative psychology than secrecy.

Kim Jin-yu, a professor at Gyeonggi University, pointed out that “a sudden announcement of a new city has no choice but to increase the need for information in advance,” and pointed out that “there is a need to develop a housing site in the long term through land planning or urban planning.”

Chief executive Shin Tae-soo said, “We need to set up a candidate army and block speculation in advance with the land transaction permission system.”

It is also necessary to improve the compensation system. The key is to filter out demand for speculation from outsiders by tightening the compensation requirements. Currently, it is subject to compensation if you own land as of the public announcement date. You will be rewarded for buying the land one day before the public holiday.

Since the reference point of compensation is the designated date of the district after the public announcement date, the land price may increase further in the meantime. The 3rd new city, Hanam Gyosan District, etc., was designated as a district about 10 months after the residents’ public announcement date. The Gyosan residents’ public announcement date is December 19, 2018, and the district designation date is October 15, 2019.

For foreigners, there is no significant difference from those of natives in compensation except for debt compensation in excess of 100 million won.

With this incident, development of housing sites such as new cities has risen on the cutting board. If you get rid of fish at all and change the recipe, your cat will not be able to covet the fish.

Housing site development through public acceptance and compensation has been the key to supplying housing. It was promoted in earnest through the Housing Site Development Promotion Act, which was created at the National Security Legislative Meeting of Chun Doo-hwan at the end of 1980. The reason for the proposal of the bill was’as a way to solve the housing shortage in urban areas, to develop and supply housing sites at low prices’. From the beginning, he found a solution to the housing shortage in Seoul outside of Seoul.

According to the Ministry of Land, Infrastructure and Transport, there are about 700 housing districts completed from 1981 to the end of last year with 585 million square meters. This means that 29 Bunnu cities (20 million square meters) in Seongnam-si, Gyeonggi-do, which are the first new cities, were built. The number of built-in households is 4 million, which is a quarter of the total 16 million houses in 2019.

However, there is not a lot of disposition of housing site development, which is causing strong speculation, high development costs, and controversy about environmental destruction due to the lifting of the development restriction zone (green belt).

There are not a few experts who sympathize with the words that Professor Yoo Hyun-jun of Hongik University appeared on the broadcast on the 6th. He said, “In our country, 91% of the cities have already been urbanized and there is no further movement to the city,” he said. “It is a more desirable direction to use the existing urban infrastructure (infrastructure) to increase the density.”

“It is not necessary to do the work of creating another residential site until now, while damaging nature,” he added. “Such things were necessary when a large population moved from rural to urban in the 1970s.”

The government also set the direction of housing supply policy through high-density urban development in the second and fourth measures announced on the 4th of last month. The main content of the 2nd and 4th measures is the supply of housing in large cities through high-density development in the city center.

The government explained, “The necessity of restructuring urban spaces is increasing in line with changes in living patterns such as the 4th Industrial Revolution, the development of new technologies such as zero energy, and non-face-to-face consumption.”

At the time, an official from the Ministry of Land, Infrastructure and Transport said, “Residential development is a one-off project and housing supply’sewage’.”

Nevertheless, it is an easy way for the government to lean on housing site development. There is no requirement for resident consent for housing site development. Housing can be supplied on a large scale within a relatively short period of time. In terms of urban reconstruction and redevelopment, there are not many purely increasing volumes of houses that are lost.

In the early 1990s, I also enjoyed the excitement of setting the price of a house in Seoul through the development of the first new towns such as Bundang.

In order to expand the supply of housing in the city center, it is important to prevent speculation in new cities, but it is necessary to speed up the high-density development of the city center by activating private participation. It’s time to change the 40-year-old’recipe’. Reporter Ahn Jang-won [email protected]