The government will break ground on an additional 119,000 to 136,000 homes in the greater Seoul area by the end of this year. Still, because private redevelopment projects have been slow to start construction, this year's target of 268,000 units is expected to fall short by as much as 50,000. Officials said there will be no additional lending curbs, which some had speculated about, and that a decision on extending land transaction permit zones will be made while monitoring market conditions at year-end. The Ministry of Land, Infrastructure and Transport plans to meet with the Seoul Metropolitan Government to continue supply talks as soon as the parliamentary audit ends.
The Office for Government Policy Coordination and the Ministry of Land, Infrastructure and Transport held their first regular briefing on housing supply at the Government Complex Seoul on the 16th, projecting construction starts in the capital region at 218,000 to 235,000 units this year. That is 81% to 88% of the annual target of 268,000 units. While the figure falls 33,000 to 50,000 units short of the target, the government said it would push construction starts as high as possible in the remaining period.
Construction had begun on 99,000 units through the second week of October, or about 37% of the annual target. For public housing, 16,200 units out of a 62,000-unit target have broken ground, an achievement rate of only about 26%. Newly built homes purchased by the government reached 13,000 units out of a 42,000-unit target, or 31%. Private redevelopment projects had started construction on 17,000 units through September, 23.6% of the 72,000-unit target.
Public housing construction starts are concentrated in the remaining months. The government said it would manage schedules so that the remaining volume, including about 45,000 public housing units and about 28,000 newly built purchased homes, breaks ground without delay. Kim Yi-tak, first vice minister of land, infrastructure and transport, said, "Because we set aggressive targets this year, the volume ended up concentrated in the second half," adding, "We will work to spread the volume throughout the year going forward."
The ministry said the sluggish pace of private-sector construction starts was the reason it lowered this year's expected achievement rate below the target. Jung Woo-jin, head of the ministry's housing supply promotion headquarters, said, "Construction starts for public volume centered on LH will come close to 100%," explaining, "Depending on performance in private volume that is hard for the government to control, such as redevelopment projects and non-apartment housing, we project construction starts at 81% to 88% of the target." Most redevelopment projects in Seoul will meet their targets, he said, but volume is slipping in Gyeonggi and Incheon because the projects are less profitable.
The government stressed that supply indicators have bottomed out and entered a recovery. Housing permits in Seoul totaled 40,000 units from January through August this year and construction starts reached 21,000 units, up 40% and 41%, respectively, from the same period last year. Kim said, "What we have shown is a trend in which construction starts have hit a low and are rising," adding, "I hope the improvement in supply indicators will be seen as a good signal for the market."
Asked whether additional lending restrictions were under review, Kim said flatly, "This is the first I am hearing of it," and, "There is no such thing." On whether land transaction permit zones, whose designation period expires at the end of this year, would be extended, the ministry's position is that it will decide after looking at year-end market conditions. Kim said, "We will keep monitoring market conditions through the end of the year and then decide on an extension," adding, "We are also looking at neighboring areas."
Separately, the Seoul Metropolitan Government held a briefing the same day on the release of a white paper titled "Assessment and Reflection on 20 Years of Seoul's Housing Supply Policy," pointing to the cancellation of redevelopment districts during former Mayor Park Won-soon's tenure as a cause of the supply shortage. Of 683 redevelopment districts between 2012 and 2020, 389, or 57%, were cancelled, erasing the opportunity to supply 430,000 homes, the city said, while construction starts from redevelopment projects were halved from an annual average of 29,000 units between 2016 and 2020 to 15,000 units between 2021 and 2025. Kim Sung-bo, Seoul's second vice mayor for administrative affairs, said, "When an annual average of 37,000 to 40,000 apartments were supplied in Seoul over the past decade, there was no particular relocation crisis," adding, "We will continue to support the supply of 40,000 private and 20,000 public units each year."
Kim, the vice minister, and Kim, the vice mayor, also plan to meet after the parliamentary audit to discuss expanding housing supply. The meeting is intended to coordinate the agenda ahead of talks between Land Minister Hong Ji-sun and Seoul Mayor Oh Se-hoon. The ministry and the city said, "We are holding working-level consultations," and, "We will explain separately once results are available."