Concerns are mounting that the government's plan to boost housing supply by raising floor area ratios in the third-phase new towns could hit a snag. About one-third of the public housing volume has already entered the construction phase, leaving limited scope to adjust floor area ratios. Analysts say that to meet the additional supply target presented by the Korea Land & Housing Corporation (LH) using only the remaining sites, floor area ratios would have to be raised beyond the original plan or design changes would have to be accelerated.
According to LH and other sources on the 22nd, the public sector has started or will start construction on 39,000 homes in the third-phase new towns by the end of this year. LH accounts for 38,000 units and other agencies for 1,000. Measured against the 124,000 public housing units within the third-phase new towns' total supply of 193,000 homes, that amounts to 31.5%, or 20.2% of the overall volume. Because floor area ratios are difficult to raise on blocks where construction has begun, these units are effectively excluded from any increase.
Momentum for raising floor area ratios has built rapidly since President Lee Jae-myung called for it during a visit to the Gyeyang third-phase new town in Incheon on the 20th. LH President Lee Sung-hoon reported at the site that lifting the average floor area ratio in the third-phase new towns from around 206% to more than 250% would allow an additional 30,000 to 40,000 homes to be supplied.
However, simply applying the same proportional increase — from 206% to 250% — to the 85,000 public housing units excluding this year's construction starts yields only about 20,000 additional homes. That is as little as half the volume Lee cited. The floor area ratio would have to be pushed to 300% for the increase to approach 40,000 homes.
That is why analysts say design changes must be expedited. Once a construction schedule is set, adjusting the floor area ratio becomes virtually impossible. District plans and designs must be revised before groundbreaking for the volume to be increased. If the revision process drags on, construction could be delayed and collide with the government's push for speed in delivering supply. Park Won-gap, senior real estate specialist at KB Kookmin Bank, said, "Compared with the measures announced so far, raising floor area ratios in the third-phase new towns is a far easier way to increase supply volume," adding, "Procedures should be shortened as much as possible and increases pursued mainly for volume that has yet to break ground."
Later-stage sites still in the early phases of development offer more room for adjustment. Gwangmyeong-Siheung entered compensation procedures in July, while Uiwang-Gunpo-Ansan and Hwaseong Jinan must also go through compensation before proceeding. Other public housing sites including Gimpo Hangang 2, Incheon Guwol 2, Yangju Jangheung and Guri Gyomun can be reviewed for potential increases according to their development stage. Those sites are better positioned to adjust land use and housing layout plans than districts where construction is already well under way.
Some argue that floor area ratios on remaining pre-construction sites should be raised to 300% rather than 250%. Because sites already under construction were designed at the low 200% range, the ratio on other sites would have to reach 300% to bring the overall average to 250%, they say. Some analysts contend 300% would not be excessive, noting that redevelopment and rebuilding projects in Seoul have already applied floor area ratios of around 350%, and that first-phase new towns are pursuing improvement projects using ratios of 300% to 350% under the special act on aging planned cities.