Raising floor area ratios at South Korea's third-phase new towns has been proposed as a way to ease concerns that relocation driven by Seoul redevelopment projects could further destabilize the rental market. Because the greater Seoul area functions as a single living zone, increasing density at existing new towns to expand housing supply is a realistic way to disperse relocation demand, proponents said.
The Korean Association for Urban and Real Estate Studies held a roundtable titled "Relocation Measures for Redevelopment Projects: What Is the Problem?" at Seoul City Hall in Jung District on the 13th, discussing how relocation tied to redevelopment affects the housing market and how to respond.
Park Dong-ha, a professor of real estate studies at Konkuk University, said relocation pressure should not be judged by simply adding up the number of homes slated for demolition across Seoul, given that housing markets are segmented by commuting conditions and living zones. Seoul and Gyeonggi Province should be treated as one connected market, with supply and demand examined by district, the professor said.
"We need to examine whether relocation pressure can be judged merely by totaling volumes across Seoul," Park said. "The market should be broken down by price range and living zone to review supply and demand across the entire metropolitan area, and relocation demand should be distinguished from the issue of households that continue to live in place."
Participants also criticized the so-called pace-control argument, which calls for slowing redevelopment projects because of relocation demand. While it may disperse relocation demand in the short term, accumulated delays in redevelopment could lead to a supply shortage in three to five years, adding upward pressure on sale and jeonse prices, they said.
As an alternative, speakers proposed raising floor area ratios at the third-phase new towns. The average ratio across the six third-phase new town districts currently stands at about 194.1%. Lifting it to around 300% would increase planned supply from about 144,000 homes to about 208,000, adding roughly 64,000 units, according to the analysis.
Jung Jae-hoon, a professor in the Department of Urban Planning and Real Estate at Dankook University, said densifying the third-phase new towns is "a strategy to create a wide-area buffer zone in the greater Seoul area." The professor added, "This is not a policy for Seoul alone; redevelopment can be linked as a single cycle across the entire metropolitan area." Raising floor area ratios at the third-phase new towns is "the fastest way to boost insufficient housing supply," the professor said.
Linking supply plans to the metropolitan area's wide-area transport network and living zones could help disperse relocation demand from Seoul redevelopment projects, proponents said.
Another analysis held that redevelopment's effect on the rental market may be mixed depending on timing. Kim Jung-seop, a professor in the Department of Earth, Environmental and Urban Engineering at UNIST, said that in the short term, rents could rise as demolition and relocation shrink the stock of rental homes while relocation demand increases. Over the longer term, however, completed redevelopment projects would produce a net gain in housing and reduce the short-term rental demand created by temporary relocation, which could push rents lower, the professor said.