Oh Se-hoon calls Seoul housing market 'real estate hell,' citing 30% drop in jeonse listings

Seoul Mayor Oh Se-hoon released a video titled "One-Hit Mayor Oh Se-hoon — What I Couldn't Fully Say at the Cabinet Meeting: A Causal Analysis Report on Real Estate Hell Under the Lee Jae Myung Administration." [Seoul Metropolitan Government official website]

Seoul Mayor Oh Se-hoon has stepped into the role of housing policy critic, arguing that the government's real estate measures have simultaneously suppressed demand and blocked supply, driving up both home prices and rental costs across Seoul. In an approximately 26-minute video, Oh identified problems spanning housing supply, mortgage regulations, the jeonse and monthly rent market, and the tax system, stressing that "a comprehensive policy overhaul is needed."

The Seoul Metropolitan Government said Oh released the roughly 26-minute video Wednesday through the mayor's official website and the city's social broadcast channel "Live Seoul." The video is titled "One-Hit Mayor Oh Se-hoon — What I Couldn't Fully Say at the Cabinet Meeting: A Causal Analysis Report on Real Estate Hell Under the Lee Jae Myung Administration."

The video is the first installment analyzing the problems and causes behind Seoul's real estate market. A follow-up is planned to outline policy directions for market normalization, Seoul city measures, and recommendations to the central government.

The city said it analyzed housing transaction statistics and 44,000 land transaction permit records, and gathered opinions from approximately 660 licensed real estate agents. "The conclusion confirmed on the ground is that residents' housing situations have become extremely difficult," Oh said.

Oh said that in the year since the current administration took office, Seoul apartment sale prices rose 13.1 percent, jeonse prices climbed 6.3 percent, and monthly rents increased 7.4 percent — what he called a "triple surge." The city said the jeonse increase was the highest in 11 years, while the monthly rent rise was the largest since records began.

Displaying a timeline of real estate policies issued in the year since the Lee Jae Myung administration took office, Oh criticized the government's approach. "The current administration's trajectory — mortgage restrictions, public-sector-led supply measures, and tightened taxation — is almost a carbon copy of the Moon Jae-in administration's policies," he said.

Oh also criticized the government's supply strategy, saying it has focused on public-sector projects rather than private-sector redevelopment and reconstruction, which account for more than 90 percent of Seoul's housing supply. He assessed that many of the announced projects have shown little progress over long periods, limiting their practical effect on new supply.

The government announced an "urban housing supply expansion and acceleration plan" on Jan. 29. Of the 32,000 units earmarked for Seoul, 89 percent — or 28,600 units — are to be built on public land. The candidate sites are Yongsan International Business District, Camp Kim, Taereung Country Club, the Agency for Defense Development and Korea Economic Development Exhibition Hall, a research institute in Bulgwang-dong, a military site in Gangseo, an Air Force base in Doksan, and the former Korea National Defense University site. A significant number of these sites were also targeted for housing supply under the August 2020 supply plan but ultimately fell through.

Oh also analyzed that after the June 27 measures capped mortgage loans at 600 million won ($402,000), buying demand did not disappear but instead shifted to apartments priced at 1.5 billion won or less. According to the city, 78.1 percent of all transactions in Seoul after the measures were concentrated in apartments priced at 1.5 billion won or below.

"The measures meant to rein in Gangnam prices have ended up pushing up prices in non-Gangnam areas, the Han River belt, and Seoul's outer districts," Oh said. City statistics show that over the eight months since last December, housing prices in Yeongdeungpo, Gangseo, Gwanak, Dongjak, Seongbuk and Seongdong-gu have risen more than 7 percent.

Seoul Mayor Oh Se-hoon attends a cabinet meeting chaired by President Lee Jae Myung at Cheong Wa Dae on Tuesday. [Yonhap]

Oh described the jeonse market as a "jeonse prison," saying available listings have shrunk by about one-third compared with a year ago, with each policy announcement accelerating the decline. "Ultimately, 55.4 percent of jeonse contracts signed this year were renewals," he said. City statistics show that of Seoul's 850 large apartment complexes with 500 or more units, 404 have two or fewer jeonse listings available.

In June, monthly rent accounted for 53.3 percent of Seoul's apartment lease market, surpassing the jeonse share of 46.7 percent. "Monthly rents have jumped even without significant changes in interest rates," Oh said. "This is not a natural shift — it is the result of policy."

Oh also identified restrictions on relocation loans for redevelopment and reconstruction projects as a factor blocking housing supply. According to the city, of the 35 redevelopment zones scheduled to relocate residents this year, 14 face uncertain financing, contractors have refused to provide guarantees at five sites, and negotiations are ongoing at nine others. He also raised concerns that high interest burdens could be passed on to union members' contributions and pre-sale prices.

Of the 27,000 new apartment units set to be completed in Seoul this year, 17,000 come from redevelopment and reconstruction projects — but that figure is expected to fall to 8,000 next year. "Demand has been suppressed by six rounds of measures while supply has been blocked by regulation, raising serious concerns about a supply shortage over the next three years," Oh said.

Oh said the burden of misguided policies is falling on young people, newlyweds, those in their 40s and 50s, registered rental business operators, and middle-class single-home owners. He noted that monthly rent for a studio near Sillim-dong university areas doubled from 400,000 won to 800,000 won in a year, and that 92,000 people applied for the Seoul Housing & Communities Corporation's Happy Housing subscription.

Oh said the comprehensive real estate tax burden is also spreading to middle-class single-home owners. The share of Seoul apartment units subject to the tax is projected to rise from 2.99 percent in 2009 to 14.9 percent this year, while the number of single-home owners in Seoul subject to the tax is expected to grow from 120,000 last year to 160,000 this year.

"Over the past year, Seoul has made 18 recommendations to the central government across seven occasions," Oh said. "This is not about confronting the government — it is about Seoul, which sees the ground situation most closely, sharing its data."

quq@heraldcorp.com