Minister of Land, Infrastructure and Transport Kim Yun-deok drinks water at a public forum on real estate policy held at the KBS annex in Yeouido, Seoul, on July 23, presided over by President Lee Jae-myung. [Yonhap]
Minister of Land, Infrastructure and Transport Kim Yun-deok drinks water at a public forum on real estate policy held at the KBS annex in Yeouido, Seoul, on July 23, presided over by President Lee Jae-myung. [Yonhap]

The government is expected to unveil a follow-up housing supply package as early as next week, after announcing its real estate tax reform plan. With President Lee Jae-myung having ordered officials to mobilize every available tool for rapid supply upon his return to the country, attention is focused on whether deregulation measures to expand the private sector's capacity to build will be included.

The Ministry of Land, Infrastructure and Transport and the Financial Services Commission held a meeting Tuesday with construction industry representatives, real estate developers and related trade associations to hear their concerns and demands regarding housing supply.

The meeting followed President Lee's directive, issued Monday during a closed-door, roughly seven-and-a-half-hour "real estate and stock market review session," to draw up a supply package by examining all available tools — including administrative measures, financial and fiscal support, and deregulation.

Industry representatives told the government that easing the financial crunch and relaxing building regulations are necessary if the government wants to accelerate short-term supply expansion centered on non-apartment housing such as newly built rental units.

Bridge loans are essential for private housing developers to secure land before obtaining permits, but the industry regards the contraction of funding from secondary financial institutions — which had been the primary source of such loans — as one of the key causes of the supply shortage. Banks' project financing (PF) lending and securities firms' PF financing have also pulled back, making it harder to move projects forward.

Industry participants also raised concerns that loan-to-value ratio restrictions in regulated zones, combined with lenders' overall loan volume management, have made it difficult to secure construction financing and for pre-sale buyers to obtain interim and final payment loans.

Extending the public fund established by the government and the financial sector to ease the PF financing crunch — currently limited to existing projects — to cover new developments as well was also discussed as a potential measure to support funding.

A real estate agency in Gangnam-gu, Seoul, on July 31, as a wait-and-see mood deepens in areas with high concentrations of expensive homes, including Gangnam and Yongsan-gu, ahead of the government's tax reform announcement. [Yonhap]
A real estate agency in Gangnam-gu, Seoul, on July 31, as a wait-and-see mood deepens in areas with high concentrations of expensive homes, including Gangnam and Yongsan-gu, ahead of the government's tax reform announcement. [Yonhap]

The industry has also floated raising the total floor area limit for a single multi-family residential building under the Building Act from the current 660 square meters to 990 square meters, along with partially easing height restrictions, as non-apartment housing is seen as a relatively faster alternative for boosting supply.

The Ministry of Land, Infrastructure and Transport had already held roughly 20 rounds of consultations with the construction and financial industries since March to discuss ways to revitalize supply, following the president's instruction to actively incorporate on-the-ground feedback.

The government is broadly reviewing ways to expand housing supply — including through urban public housing complex projects, redevelopment and reconstruction projects, and non-apartment housing — while working to identify all available supply sites such as public housing land, state-owned land and military sites. The possible use of greenbelt land to secure additional sites is also under consideration.

Sites previously floated as greenbelt release candidates are again being mentioned, including a reserve forces training ground in Naegok-dong, Seocho-gu, Seoul, and an area near the Olympic Athletes' Village in Bangi-dong, Songpa-gu. Land Minister Kim Yun-deok said at a real estate policy forum on July 27 that since taking office she has been "actively considering releasing some greenbelt land to enable housing supply."

The Yongsan Children's Park, considered a prime urban location, has also been mentioned as a possible inclusion in the upcoming supply announcement, though the Ministry of Land, Infrastructure and Transport said it is "a plan that has not been decided upon at all."


hope@heraldcorp.com