The government decided to speed up development projects such as construction of new cities and public redevelopment and reconstruction to expand housing supply, instead of maintaining the stance of strengthening real estate taxation and loan regulations.
The plan is to make resolving supply shortages a priority while maintaining the existing principles of eradicating speculative demand and protecting end users. Experts point out that without support for the private market and demand, the public-centered supply plan will eventually be the’half-side’ measure.
On the afternoon of the 18th, the government held a’Joint Briefing on Real Estate Markets’ at the Government Complex Sejong with the Ministry of Strategy and Finance, the Ministry of Land, Infrastructure and Transport, the National Tax Service, the National Police Agency, the Seoul City, and the Financial Supervisory Service.
In the briefing that day, the current status of the existing policies and plans for future progress were introduced. The Ministry of Land, Infrastructure and Transport will supply 62,000 pre-subscribed households, including the third new city, by next year. Among the new housing sites with 48,000 households under construction, 6,300 households in the Guri-galmae Station area will be subscribed this year.
The Seoul Metropolitan Government selects eight candidate sites for public redevelopment that have a great effect on housing supply and improvement of the residential environment, and establishes a maintenance plan within the year and appoints an implementer. Through this, about 4700 households can be supplied. In March, additional candidates are also selected. Public reconstruction, which supplies 1.5 times more houses and reduces residents’ contributions by an average of 35%, will also be promoted around 7 complexes that have passed preliminary consulting.
The target area for the Seoul station area has been increased from 207 to 307, and the range of station area where high-density development is possible has also been expanded from 250m to 350m. Through this, about 22,000 additional households will be supplied by 2025.
‘Public small-scale reconstruction’, which overhauls small complexes with less than 200 households, and’equity-equipped pre-sale housing’, which pays only a certain amount of 20-40% of the pre-sale price and purchases the remaining shares in installments, will also be introduced in earnest this year. The target is to supply 10,000 households by 2023 and 17,000 households by 2028, respectively.
Heung-jin Kim, head of the Ministry of Land, Infrastructure and Transport, said, “As a result of consulting for 7 complexes that applied for public reconstruction, I think that the amount of supply is increased and the burden is reduced, thereby securing a certain degree of business feasibility,” he said. “I will show success cases quickly so that public reconstruction will spread a lot.” In addition, it was announced that the market would provide groundbreaking supply measures that the market wanted, such as supplying the station area and expanding the amount of jeonse, before the Lunar New Year holidays in February.
Earlier, President Moon Jae-in said in a press conference that morning, “Even with low birthrates, the number of households has increased due to differentiation of 610,000 households, and the demand for supply has exceeded (than predicted), and the shortage of supply has a side that has fueled real estate prices.” Acknowledged the failure of the policy.
He predicted measures in February, saying, “We will increase supply beyond the level expected by the market in the metropolitan area, especially downtown Seoul.”
Excluding the expansion of housing supply, the government’s speculation regulation stance became more pronounced.
Lim Jae-hyun, head of the tax office of the Ministry of Equipment, said, “The current government does not consider easing or suspending the transfer tax,” and said, “Because the heavy duty system for transfer tax will be implemented from June 1st, a lot of products from multi-homed people will appear in the market.”
Kim Dong-seon, assistant secretary of the Financial Supervisory Service, also said, “We will discuss with relevant ministries such as the Financial Services Commission and the Ministry of Science and Technology for supplementary measures to provide benefits such as preferential mortgage loans (LTV) for the end-users of ordinary people.” Did.
In addition, they showed a lukewarm position on incentives, such as excluding the pre-sale price limit to revitalize private participation in public reconstruction.
Instead, the Ministry of Information and Communication emphasized the unchanging strengthening of real estate taxation, and the Financial Supervisory Service emphasized compliance with regulations of 40% of the total debt repayment ratio (DSR) of over 100 million won in credit loans for high income earners with an annual salary of over 80 million won.
Experts say that it is difficult to satisfy end-users with the government’s public supply-oriented policy. Song In-ho, head of the Korea Development Institute (KDI) Economic Strategy Research Department, said, “In the end, the unrest in the real estate market is caused by excessive public intervention and a decline in the function of private supply, and the solution to this is unfortunate.”
Young-jin Ham, head of Jikbang’s Big Data Lab, advised that “stake-saving pre-sale houses and small-scale reconstruction are encouraging policies for the underprivileged”. “In order to stabilize the housing market, revitalization of private pre-sale and relaxation of loan restrictions for homeless end-users should be combined.”
Reporter Kim Hyun-joo [email protected]
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