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(LEAD) Gov't to push forward home supply plan: finance minister

All News 11:30 August 05, 2020

(ATTN: ADDS 2nd photo and Seoul city official's explanation in paras 5-8, background in last 3 paras)

SEOUL, Aug. 5 (Yonhap) -- South Korea will push forward its latest housing supply plan in greater Seoul area as scheduled despite simmering discord with the Seoul city government, the finance minister said Wednesday.

On Tuesday, the government announced it will supply 132,000 housing units in Seoul and its neighboring areas by 2028 by easing regulations for reconstruction of aged apartments, which centers on allowing up to 50 floors for redeveloped residential buildings, in its latest efforts to curb rising home prices.

Finance Minister Hong Nam-ki delivers a speech in a meeting with officials in charge of real estate policies at Government Complex Seoul on Aug. 5, 2020. (Yonhap)

In a briefing held after the release of the government's supply plan, however, the Seoul city government said it will stick to its basic urban plan that restricts apartment buildings to a maximum of 35 floors.

"The Seoul city government didn't oppose the (central government's) plan to supply more homes, and it asked for amendments in the current rules involving the private-sector reconstruction projects," Finance Minister Hong Nam-ki said in a meeting with officials in charge of real estate policies in Seoul.

As for the minister's comments, a Seoul city official said that the city government called on the central government to ease regulations on rebuilding apartments in the greater Seoul area in exchange for providing some public homes.

Associations of residents in apartment complexes awaiting to be reconstructed want the government to ease regulations on their apartments' reconstruction. Such associations are regarded as business entities seeking gains from reconstruction of apartment complexes.

But the government's latest home supply plan will allow state-run companies such as the Korea Land & Housing Corp. (LH) and the Seoul Housing & Communities Corp. (SH) to become the operator of apartment rebuilding projects to supply more public homes to the underprivileged.

The projects led by SH and LH are not welcomed by the associations because they do not bring expected gains from the reconstruction of their apartments.

"The government will cooperate with the Seoul city government and representatives of apartment reconstruction projects to push ahead with the home supply plan," Hong said.

This photo taken July 15, 2020, shows high-rise apartment buildings in the southeastern Seoul ward of Songpa as seen from an observatory at Lotte World Tower, also in Songpa. Songpa is regarded as one of the four southern Seoul wards where housing prices are higher compared with other areas of the capital. (Yonhap)

The measures follow dozens of previous ones released under the Moon Jae-in administration in the past three years to stabilize the real estate market. But the past measures fell short of having brought rising housing prices under control.

Experts said the new supply plan won't have an immediate effect on the market as it will take at least three to five years before the proposed homes will be ready for the people in need.

They said it will be possible to provide more public homes through redevelopment of areas with smaller residences, instead of reconstructing existing apartment complexes.

"With the presale price cap for newly built apartments and the system to retrieve excessive gains from the reconstruction already a headache for them, residents do not want SH and LH take the lead in their apartment reconstruction projects due to lack of returns," Kwon Dae-jung, a professor in the department of real estate at Myungji University, said.


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