Seoul blames past deregulation for housing shortage, urges national government to ease rules

Seoul's city government contends that the current housing supply shortage in the capital stems from a cumulative effect of past deregulation of urban renewal projects, directly challenging President Lee Jae-myung's assertion that redevelopment and reconstruction offer minimal net gains in housing stock. A report released by the city on August 7th details how the cancellation of numerous redevelopment zones and the suppression of new project designations over the years created a "structural supply vacuum."

The report, titled 'Diagnosis of Causes and Countermeasures for Housing Supply Shortage in Redevelopment and Reconstruction,' was presented to Kim Yong-beom, the Presidential Office's Chief Policy Secretary, following President Lee's directive on August 5th to report on the capital's housing supply status. Seoul Mayor Oh Se-hoon met with Kim to explain the current state of redevelopment and reconstruction projects, supply shortage causes, and necessary institutional improvements.

According to the city's analysis, the impact of these past policies, particularly during the tenure of former Mayor Park Won-soon (2012-2020) when policy shifted towards urban regeneration, led to the cancellation of 389 redevelopment zones. Furthermore, the introduction of the housing redevelopment index system and strengthened resident consent procedures resulted in no new redevelopment zones being designated between 2016 and 2020. This policy shift, the city argues, has had a delayed but significant impact, causing a 48.3% decrease in redevelopment project starts between 2016-2020 (averaging 29,000 units annually) compared to 2021-2025 (projected at 15,000 units annually).

To counter this, Seoul is pushing for four regulatory changes: easing the rental housing ratio in redevelopment projects, increasing the floor area ratio by 1.2 times, temporarily suspending the three-year limit on transferring 조합원 (cooperative member) status, increasing the loan-to-value ratio for relocation loans from 40% to 70%, and lowering the consent rate for establishing redevelopment cooperatives from 75% to 70%. The city emphasizes that recent projects have shown significant increases in housing units, with 59 completed redevelopment and reconstruction sites adding 36.4% more housing units than before the projects began. The city projects that its 253 managed sites, targeted for commencement by 2031, will increase housing stock from 223,000 to 310,000 units, a rise of 39.2%.