Experts Say, "Prime Sites Released in Bulk, But Easing Rules on Urban Renewal Should Have Been Included"

Experts described the government’s January 29 Real Estate Measures as "high-purity supply concentrated in prime locations in central Seoul," giving the plan a largely positive assessment. However, they also pointed out a clear limitation: the package does not include measures to link this with urban renewal projects, which account for about 80% of private-sector housing supply in Seoul.
On the 29th, the government announced a real estate package that will supply a total of 60,000 housing units. Analysts focused on the fact that the plan pours available units into areas with strong pent-up demand. Unlike past announcements that mainly emphasized new town developments on the outskirts, this one centers on key locations in the Seoul metropolitan area, which some say could help stabilize buyer sentiment.
Nam Hyuk-woo of the Woori Bank Real Estate Research Institute said, "It is fair to call this a massive release of prime sites in central Seoul," adding, "The mixed-use urban development model that links subway lines with jobs aligns precisely with the needs of households that prioritize living close to work." In particular, Yongsan (12,600 units), Gwacheon (9,800 units), and the Taereung Country Club site in Nowon District (6,800 units) are cited as locations with inherently high value. Ham Young-jin, head of the Woori Bank Real Estate Research Lab, also noted, "By increasing supply in areas where demand is concentrated, the measures directly target structural issues in the market, such as the strong preference for top-tier neighborhoods."
Observers also say the plan is reasonably feasible. Chang-Moo Lee, a professor of urban engineering at Hanyang University (HYU), explained, "Most of the sites have already been cleared or are public land," and added, "As long as there is agreement with local governments, implementation does not look particularly difficult." Even so, in areas where there is growing backlash against more housing, there is a possibility that volumes will be scaled back or projects delayed. Eunhyeong Lee, a research fellow at the Korea Research Institute for Construction Policy (RICON), pointed out, "In Yongsan, the long-term goal of enhancing urban competitiveness may inevitably clash with the immediate goal of increasing housing supply," stressing that "continued discussion will be necessary." Yang Ji-young, a senior specialist at Shinhan Premier Pathfinder, also warned, "In Yongsan and Taereung, risks such as the need to coordinate with the Seoul city government and opposition from residents mean there is a high likelihood that the announced supply will diverge from the actual number of units that break ground."
Experts expressed disappointment that the package does not include measures to revitalize urban renewal projects, which should accompany increased supply in the Seoul metropolitan area. Park Hap-soo, a professor at the Konkuk University Graduate School of Real Estate, said, "Private-sector reconstruction and redevelopment account for 80% of Seoul’s housing supply," and argued, "The government should have simultaneously announced deregulation for urban renewal projects, such as abolishing the Reconstruction Excess Profit Recovery System and granting exceptions to relocation loan restrictions." Lee of RICON added, "Because idle land is limited, in the long term we need a broader blueprint that connects this policy with inner-city urban renewal projects." Yang from Shinhan Premier Pathfinder noted, "The market had been expecting measures such as higher floor area ratios for urban renewal projects, but since they were omitted, the momentum for large-scale, private-sector-led supply expansion has not been secured." As the announcement did not specify the ratio between units for sale and for rent, she said that finding the "golden ratio" between the two should also be treated as a key task.
Meanwhile, it remains unclear whether the new measures will actually drive down home prices. Nam predicted, "Given the ongoing shortage of listings and upward pressure on prices from factors such as instability in the jeonse and monthly rent housing market ahead of the spring moving season, any resulting price declines are likely to be limited." Ham of the Woori Bank Real Estate Research Lab also projected, "If supply remains constrained and the pace of new supply is slow, and if taxes and regulations increase significantly in the second half of the year, the market could enter a phase where prices hardly fall but transactions almost grind to a halt."
ming@fnnews.com Jeon Min-kyung Reporter