February 05, 2021 11:40
The government hopes to fight a dire housing shortage in the Seoul metropolitan area by pushing forward urban reconstruction and redevelopment projects.
To attract private builders to the massive projects, the government will ease some regulations considered sacrosanct until now, including confiscation of excess profits from apartment renovations.
The decision comes after 24 different sets of real-estate regulations, including massive property tax hikes, have failed to tame housing prices in the capital.
The government on Thursday announced plans to build 830,000 homes across the country by 2025. That includes 323,000 in Seoul and 293,000 in the western port city of Incheon and Gyeonggi Province.
The government aims to shorten the overall construction period of housing complexes by up to five years. They often take more than 10 years.
Finance Minister Hong Nam-ki said, "Through what will amount to a 'supply shock,' we will boost the stock of available homes so that the real estate market will stabilize." They will be mainly built by state-owned companies like Korea Land and Housing Corporation or LH in neighborhoods close to subway and train stations, semi-industrial districts and neighborhoods with low-rise homes.
A certain portion of each project must be allocated to affordable housing for younger first-time buyers. Some housing restrictions will be eased to allow construction firms to build high-rise apartments in high-density residential areas.
It remains to be seen whether property developers will bite given that profit margins are likely to be small.
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