President Lee Vows to Halve New Town Construction Time, Expand Loan Support

President Lee Jae-myung announced plans to significantly shorten the construction period for third-phase new towns, aiming to reduce it by more than half from the current estimated 60-plus months. Speaking at a national forum on real estate policy, he also pledged to expand loan support for residents undergoing redevelopment projects. The president acknowledged the difficulties in securing new land for housing development, noting that the expansion of the Seoul metropolitan area has made it challenging to find suitable sites.

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We are internally reviewing ways to reduce the construction period for third-phase new towns by more than half, as it currently takes over sixty months. If necessary, we will change regulations or proceed with sequential steps in parallel to shorten the time.

During the forum, participants raised concerns about the stringent regulations on relocation loans, which they identified as a major obstacle to redevelopment projects. Yang Ji-young, a specialist at Shinhan Premier Pathfinder, pointed out that while top construction companies in Seoul's Gangnam area can secure additional loans beyond the basic relocation support, other regions face limitations, hindering project progress. Park Jin-ju, a Seoul resident, urged for an increase in loan-to-value ratios for properties valued under 600 million won, citing the difficulty of finding family-sized rental apartments in Seoul.

President Lee indicated that the administration is considering shifting the basis for relocation loans from existing home collateral to newly built homes. The discussion also touched upon the effectiveness of redevelopment and reconstruction in boosting housing supply. Lee questioned whether redevelopment truly increases housing stock, as it often leads to a decrease in the number of households and requires existing residents to relocate. Lee Kwang-soo, CEO of Kwangsoonebokdeokbang, warned that easing reconstruction regulations could lead to a surge in demolitions and market instability, suggesting a need for total volume control on reconstruction projects in Seoul.

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In Seoul's Gangnam area, first-tier construction companies can receive basic relocation loans along with additional loans, but in other regions, they must be allocated only the basic relocation loan, making project progression difficult.

Suggestions were also made to utilize private rental housing as a means for rapid supply. Chae Sang-wook, CEO of Connected Ground, highlighted the absence of specific plans for private long-term rental housing in the government's housing supply strategies. He proposed fostering developers specializing in private long-term rentals and introducing supply-side financing. To expedite housing delivery, President Lee stated that internal reviews are underway to adjust regulations and streamline procedures for the third-phase new towns.

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For apartments on the outskirts of Seoul, the appraised value is not high, so a person with one home can only receive 100 to 200 million won in relocation loans. Since finding a rental apartment for three or more people in Seoul is like finding a needle in a haystack, please consider alternatives such as raising the loan-to-value ratio conditions below 600 million won.