[Exclusive] Democratic Party also makes a high-stakes 'all-out attack' move, pushing for a record 38 trillion won in public housing spending

[Financial News] The Democratic Party of Korea is pushing to increase next year's spending from the government's proposal by an additional 5.2 trillion won, bringing the Housing and Urban Fund, which finances public housing supply, to a total of 38.2 trillion won. The government has already increased funding by 9.8 trillion won from this year, and with the Democratic Party seeking a further increase, the total rise from the previous year would reach 15 trillion won. Separately, the party is also considering an additional 5 trillion won in government funding to bolster the fund's stability.
Democratic Party officials affiliated with the National Assembly's Special Committee on Budget and Accounts and Land, Infrastructure and Transport Committee said on the 29th that consensus had formed within the party on increasing funding to expand public housing supply. A senior Democratic Party official on the budget committee said, "Our lawmakers share a consensus on the view that the budget should be increased further for public housing, including public rental housing."
The Ministry of Land, Infrastructure and Transport plans to increase funding related to public housing from 23.2 trillion won this year to 33 trillion won next year. The Democratic Party plans to add 5.2 trillion won to that amount, bringing the increase from the previous year to 15 trillion won. This would be 15.8% more than the government's original proposal and about 64.7% higher than this year.
Behind the push for an increase is the financial burden on Korea Land and Housing Corporation (LH) resulting from rising construction costs. A Democratic Party official on the Land, Infrastructure and Transport Committee explained, "The fund covers around 70% of public housing project costs, but due to rising construction costs and other factors, the actual level of support is only about 50%." LH has covered the shortfall in project costs with its own revenue or bond issuance, increasing its debt burden and constraining efforts to expand new housing supply, the official said.
The Democratic Party plans to expand the fund's spending to ease LH's project cost burden and strengthen its capacity to deliver public housing. In particular, it aims to meet housing demand among young people and newlyweds facing high housing costs, especially in the Seoul metropolitan area.
The party is also pursuing a separate fiscal injection to improve the fund's sustainability. A Democratic Party official on the Land, Infrastructure and Transport Committee said, "It typically takes 30 to 40 years to recover funds invested in public housing." The official said the burden of managing the fund had accumulated because government fiscal support had been insufficient since 2014. The Democratic Party is considering an additional injection of about 5 trillion won in government funds to address this.
The Democratic Party plans to flesh out its proposed increase during the Land, Infrastructure and Transport Committee's budget review, then consult with the Ministry of Planning and Budget during the review by the Special Committee on Budget and Accounts. However, as calls for increases in other sectors are also in play, the amount ultimately included is expected to depend on the room available for budget adjustments and the outcome of consultations with the government.
[email protected] Kim Hyeong-gu, Kim Gyeong-min Reporter