President Lee Jae-myung told a Cabinet meeting on the 20th that officials should "not be bound by existing practices and procedures" in supplying housing. He called for a "supply blitz" that would dramatically shorten the time needed for land development, permits and groundbreaking. That afternoon, he visited the Gyeyang district in Incheon, the first of the third-phase new towns where residents will begin moving in at the end of this year. The government has announced plans to break ground on 1.5 million homes in the greater Seoul area by 2030. Yet 66% of public presale projects permitted in the capital region over the past five years, or 67,000 units, have not even broken ground. No matter how many homes the government pledges to build, actual permits and groundbreaking are another matter. With housing supply urgently needed, the president was right to press for speed over convention.
But encouraging new construction alone will not ease housing insecurity. Rules that constrain the sale and rental supply of existing homes must also be revised. The land transaction permit system, expanded under the Oct. 15 measures last year, is a prime example. All of Seoul and 15 areas in Gyeonggi Province are now designated permit zones, drawing persistent criticism that the system distorts the market and shrinks the supply of rental listings. Seoul Mayor Oh Se-hoon has said that "the sweeping designation of permit zones and the owner-occupancy requirement are deepening the strain in the jeonse and monthly-rent market." Even Gyeonggi Governor Choo Mi-ae, a member of the ruling party, said at a parliamentary audit the previous day that "the permit system needs to be lifted quickly." The government should not dismiss a problem raised by the heads of the capital region's two largest local governments across party lines.
The owner-occupancy requirement under the permit system is designed to curb speculative demand such as gap investment — buying a home while a tenant's jeonse deposit covers most of the price. But it has also blocked the route by which buyers purchase homes and supply them as rentals, fueling price gains and strain in the lease market. Seoul apartment prices have risen for 87 straight weeks, and the rental market is especially unstable. Monthly rent accounted for 51.0% of Seoul apartment lease transactions from January through September, crossing half for the first time. The reason was a 27.5% plunge in jeonse transactions. The average jeonse price in northern Seoul also jumped to 599.43 million won last month, approaching the 600 million won mark.
Since the president has called for speed beyond practice and procedure, the same standard should apply to regulations that block market flows. For the land transaction permit system as well, the government should adjust the scope of designation to local market conditions and devise ways to reduce the side effects of the owner-occupancy requirement. A "supply blitz" can be effective only when it comes with regulatory improvements, including a redesign of the permit system.