As anxiety in the market stems from a lack of dwelling supply, major political parties' presidential candidates have pledged to stabilize house prices by expanding dwelling supply. They hold the view that the polarization between the metropolitan area and provincial areas, exacerbated by past demand suppression policies, can be resolved through expanded supply.
While presidential candidates share the goal of stabilizing the dwelling market, their approaches differ. Lee Jae-myung, the Democratic Party of Korea's presidential candidate, plans to expand dwelling supply through the increase of high-quality public rentals. In contrast, Kim Moon-soo, the People Power Party's presidential candidate, intends to increase public dwelling supply while also expanding the supply base in the private dwelling market and reforming the current tax system, including the removal of additional taxes on multiple dwelling ownership.
However, as none of the main candidates specifically present the methods and targets for expansion, concerns arise that the anxiety stemming from the lack of dwelling supply will become a reality even after the new government takes office.
◇ Agreement on expanding public dwellings… Redevelopment, reconstruction as "public benefit" vs "market-led"
As of the 30th, according to policy pledges of major political parties, both candidates, Lee and Kim, have made expanding dwelling supply one of their pledges. Lee promised to expand the supply of dwellings for actual dwelling demand. Kim also vowed to realize "dwellings where one wants to live."
Both candidates have announced plans to expand public dwellings. Lee mentioned expanding urban public housing complex projects and developing areas around railway vehicle depots, transfer stations for the Seoul Metropolitan Express Railway (GTX), and government buildings to deliver dwellings close to workplaces. Lee also plans to utilize idle sites owned by public institutions and corporations aggressively to expand the supply of dwellings and job facilities.
Specifically, Lee also unveiled a pledge to pursue the legalization of the roadmap for public rental dwelling supply. Furthermore, Lee intends to increase various forms of tailored public sales and affordable housing.
Kim also assured an expansion of public dwelling permits (subscription, expansion of new sites), the initiation of public dwelling construction, and rapid implementation to enhance the supply base in the public sector. Kim continued by stating the swift supply of public rental dwellings for single young people and newlyweds and ensuring affordable options if desired. Kim added that the government would support rent when residing in public rental dwellings and assist with interest on installment payments when residing in public sales dwellings.
Both candidates agree on the need to expand dwelling supply through the redevelopment and reconstruction of urban areas where dwelling supply shortages are severe. The method of redeveloping deteriorated cities and increasing dwelling supply within urban areas, including the first phase of new town renovations, is also similar.
However, the reorganization project approach slightly differs. Lee emphasizes "public benefit" in proceeding with reorganizing projects. Lee stated plans to mitigate redevelopment and reconstruction procedures, floor area ratios, and building coverage rates under the principle of strengthening public benefit, without mentioning the reconstruction excess profit return system (RSPR), a key issue in the reconstruction market.
RSPR is a system where excess profits from reconstruction, exceeding 80 million won per member, are collected, with a maximum of half being taken.
Kim, compared to Lee, appears to emphasize the role of the private sector. Kim plans to supply 250,000 dwellings in Seoul and stated the intention to enhance the supply base in the private dwelling market through the revitalization of urban reorganization projects. Particularly, Kim promises to ease reconstruction levies by abolishing the reconstruction excess profit return system to boost urban dwelling supply.
While Kim mentioned the scale of dwelling supply planned for Seoul, neither candidate presented nationwide supply quantities. During the last presidential election, Lee proposed supplying 1.07 million dwellings in Seoul, 1.51 million in Gyeonggi and Incheon, and a total of 3.11 million dwellings over five years, but has not specified exact figures this time.
An official from a construction company said, "While there is anticipation in terms of increased supply, due to the lack of immediate tangible quantities, we will keep an eye on the situation post-election."
◇ Different "tax" approaches… "Avoid using taxes" vs "abolish additional taxes on multiple dwelling owners"
Presidential candidates hold different perspectives on restructuring the tax system to stabilize the dwelling market.
To mitigate the polarization between the metropolitan area and provinces caused by the "one smart dwelling" phenomenon due to demand suppression policies, Lee intends to minimize tax interventions. Lee mentioned, "I will concentrate housing policies on expanding dwelling supply for the middle class and low-income groups, instead of focusing on curbing high-price apartment prices." Lee also said the previous day, "It is generally advisable to avoid using taxes for controlling demand," and suggested, "Let's match supply and demand by increasing supply."
Conversely, Kim has indicated plans to revive the real estate market in non-metropolitan areas through tax reforms, such as abolishing additional taxes on multiple dwelling owners. Kim emphasized that removing additional tax burdens would resolve the "one smart dwelling" concentration and the metropolitan-province market polarization. Kim intends to switch from the current system of applying different tax rates based on the number of dwellings owned when levying the comprehensive real estate tax to a value-based taxation system, looking to integrate it with property taxes in the long term. This implies that, even if someone owns only one dwelling, they will pay more in comprehensive real estate tax if the dwelling price is high.
Additionally, Kim promised to abolish capital gains tax surcharges on multiple dwelling owners, and eliminate acquisition taxes when purchasing dwellings in non-metropolitan areas.
Regarding unsold units in provincial areas, Kim stated, "To resolve unsold apartment issues, I will promote direct purchases by the Korea Land and Housing Corporation (LH) and reintroduce long-term (8-year) purchase-type private rentals." On the other hand, Lee mentioned strengthening the capabilities of regional construction companies, but did not specifically address the problem of unsold units in provincial areas.
◇ Tailored dwellings for youth and newlyweds expected to increase… dwellings for the elderly to expand
The forthcoming government is expected to prepare real estate policies for different life stages. All presidential candidates have promised tailored dwelling provisions based on life stages. Lee plans to expand the supply of public rental dwellings tailored to the lifestyle of young people, newlyweds, and the elderly. There are also plans to introduce dwellings specialized in care services. Lee particularly intends to increase welfare dwellings for the elderly and develop large-scale residential facilities where retirees can live together.
Kim promised to supply the '3·3·3 dwellings' for young married couples: supporting dwelling costs for a total of nine years—three years after marriage, three years for the first child, and three years for the second child—with an annual supply of 100,000 dwellings. Furthermore, Kim vowed to provide "lifestyle-separation, generation-crossing apartments" for new parents and their parents' generations. Kim proposed a new 'combined subscription system' between couple and parent generations, offering special points during the application process. This also includes a special law for introducing senior-care dwellings (tentatively named) for urban-senior-care dwellings.