“Within the time bought by the October 15 housing-market stabilization package, we will prepare a real, effective supply plan that can stabilize the market.”
On October 20, Presidential Office Policy Director Kim Yong-beom wrote this on his Facebook page. It was the first time since taking office that he expressed his views publicly through social media. His statement reflects the core aides’ perspective on the “10·15 housing-market stabilization plan.”
The 10·15 plan was a very “rough” policy response, designating all of Seoul and parts of southern Gyeonggi Province as regulated areas—adjustment zones, speculative-overheating districts, and land-transaction permit zones—to choke off speculative demand. Kim argued that “extraordinary times require extraordinary measures,” insisting that aggressive demand-suppression was unavoidable.
Now, in the near-shutdown of housing transactions—a condition unsustainable in the long term—the government is placing the fate of its administration on housing supply.
Yet for the central government, a supply policy is almost a mirage. The government does not directly build houses. Although the LH Corporation oversees land and public housing, South Korea’s housing supply model has long been: the government sells land; the private sector builds the houses.
While the administration and ruling party can promote legislation to support private-sector supply, this does not mean the central government can simply “create housing” in specific locations. There is also a time lag before any supply policy affects prices. This is why stabilizing home prices through supply alone is difficult.
Despite these structural limits, the Lee Jae-myung administration is pursuing a two-track plan:
- Quickly extinguish short-term speculative demand
- Stabilize housing prices through supply measures
To understand the detailed supply initiatives the government is preparing, one must first examine the September 7 “New Government Housing Supply Expansion Plan” (9·7 Plan).
The 9·7 Plan has three main pillars:
- Expand LH-direct public-land development projects
- Unlock diverse ideas for increasing supply within Seoul’s urban core
- Strengthen support for private redevelopment and reconstruction
The government stated that based on these policies, 1.35 million homes would be started in the Seoul metropolitan area over the next five years.
Large, round “million-unit” housing targets are familiar in Korean politics.
During the 2022 presidential campaign, both Yoon Suk-yeol and Lee Jae-myung pledged 2.5 million housing units. After taking office, the Yoon administration quickly announced the “8·16 plan,” targeting 270,000 units nationwide per year (50,000 in Seoul, 1.58 million in the metro area).
But rising interest rates and the December 3 coup incident made those numbers little more than empty slogans.
Now, the Lee Jae-myung administration—having taken power in the aftermath of the coup—is again putting forward million-scale supply goals. The 1.35-million figure is not random. Between 2015 and 2024, the 10-year average annual housing starts in the metropolitan area was about 258,000 units.
But during Yoon’s three years, interest-rate spikes caused a PF crisis, construction-cost surges, and demand contraction, pushing annual starts down to 158,000 units. The administration’s calculation:
- Shortfall per year: ~92,000 units
- Needed average for next 5 years: ~270,000 units
- Total for 5 years: 1.35 million units
The math is simple—but the implementation plan is not.
To push supply aggressively, the central government must accept some form of “equivalent exchange”—trade-offs and sacrifices.
Yet the specifics of those trade-offs remain unclear.
The government argues that LH can act boldly in public-land districts, unlike private developers who hesitate due to fear of unsold inventory. By improving land-use efficiency, converting land uses, and accelerating project speed, they want to raise public-land housing starts from 250,000 to 370,000 units.
But these measures mostly apply to large tracts of land outside Seoul, particularly in Gyeonggi Province.
This essentially means expanding “bed-town” suburbs—strengthening Seoul-dependent commuter towns.
Here arises the trade-off:
To lower Seoul’s density, the government plans to shift originally self-sufficient new towns toward simple bedroom communities. This invites backlash from local governments, especially in the 3rd New Towns, which were originally planned by the Moon administration as job-creating, self-sustaining cities.
Most municipalities in Gyeonggi dream of “becoming the next Pangyo.”
But not every region can attract enough companies. Many industrial districts instead filled with knowledge-industry centers, commercial buildings, or residential-hotel blocks—often ending in large-scale vacancies.
Residents are understandably resistant to their towns becoming bed-towns, especially after witnessing the rapid decline of 1st-generation new towns.
To meet supply goals, the Lee administration must push through local opposition and reconfigure housing districts toward public rental and public sale, even against local speculative sentiment.
Supply in empty suburban land is one thing; supply inside Seoul is far more difficult.
The government insists that “Seoul still has idle land, old facilities, and redevelopment potential,” but the cases they present are extremely challenging.
A key example is the reconstruction of public rental housing, such as the Suseo and Gangseo sites.
These complexes, built in the late 1980s and early ’90s, are aging, and social isolation of tenants has become a problem. Some nearby private residents have demanded that rental-housing students be excluded from school zoning—discriminatory practices that local authorities sometimes accepted.
This sparked longstanding research on how to redevelop aging public rental apartments.
However, a 2023 LH Land & Housing Institute study concluded that rapid redevelopment was not feasible.
Simulations showed:
- Per-unit losses of several million to tens of millions of won
- Enormous challenges securing relocation housing for thousands of low-income households
- Difficulty finding replacement rental units even in outer-Seoul districts like Gangseo
But despite these findings, the 9·7 Plan includes the Gangseo site, claiming 3,235 units of new supply—contradicting LH’s earlier conclusion that redevelopment requires long-term, legally supported, carefully prepared relocation strategies.
The government is effectively using public-rental reconstruction as a short-term “hidden card”, despite evidence that such projects cannot be executed quickly.
The administration’s housing crisis stems from price spikes in select parts of Seoul, not nationwide price surges.
This differs from Yoon administration, which governed during a rate-hike slump and Moon administration, when prices rose across the country.
Because demand is concentrated solely in Seoul, alternative measures—such as property-tax reform—are politically taboo, especially before next year’s local elections.
The Democratic Party is distancing itself from any discussion of higher holding taxes.
The government plans to soon announce additional metropolitan housing-supply measures, including new housing-site districts.
But without a breakthrough to relieve Seoul concentration, supply policies will only grow more difficult and the disappointment-driven backlash will intensify.
The government is betting too much on “supply policy.”
Posted by Freewhale98