The Korea Land and Housing Corporation (LH) will directly purchase 3,000 unsold dwellings in non-capital regions to address the unsold housing issue. A corporate restructuring real estate investment company (CR REITs) that acquires and operates unsold dwellings in regional areas will also be launched early. To induce housing transaction demand in the market, preferential interest rates will be applied to the stepping stone loans. Through this, they plan to resolve over 8,000 unsold dwellings in regional areas.
The Ministry of Land, Infrastructure and Transport announced on the 19th a regional construction market supplementary plan in conjunction with the Ministry of Strategy and Finance and the Financial Services Commission. This comes as the number of unsold dwellings in regional areas has surged, increasing the risk of bankruptcy among non-capital construction companies, necessitating measures to support the recovery of the regional construction market. The inventory of unsold dwellings in regional areas reached 53,000 units last year. Among these, 17,200 are deemed as chronic unsold properties post-completion. The increase in unsold units leads to poor performance among region-based construction companies and a regional economic slowdown.
According to this measure, LH will purchase 3,000 unsold APT. units in regional areas at a price lower than the sale price, taking into account rental demand. In addition, the 'purchase-type registered lease' for non-APT. units will be expanded to include unsold APT. units (under 85㎡) in regional areas.
The funding will utilize 300 billion won from the existing budget for the mainstay rental purchases. It will also leverage the Dungun Jeonse system, using the security deposits from tenants moving into the unsold APT. units purchased by LH. Dungun Jeonse is a system where LH purchases and supplies units for jeonse, with pricing at 90% of the market rate, allowing tenants to reside for a maximum of eight years before deciding on conversion to sale.
The Ministry of Land will also support the launch of CR REITs, which acquires and operates unsold dwellings in regional areas, within the first half of the year. They plan to resolve a total of 5,000 unsold dwellings in regional areas through CR REITs. At the end of last year, the Housing and Urban Guarantee Corporation (HUG) established a 'special consultation window for CR REITs' and is currently conducting consultancy for about 3,800 units, including pre-appraisals.
Additionally, the Ministry of Land will apply preferential interest rates for stepping stone loans to enhance the increasing demand for unsold dwellings post-completion in regional areas. They will also increase liquidity to activate housing transactions. When establishing household loan management plans, local banks will be permitted to exceed the current growth rate of 3.8%. Financial institutions are expected to receive incentives for including expanded handling of local housing loans in their annual household loan management targets.
Measures to ease loan restrictions for regions were excluded. The Ministry of Land plans to determine the specific scope and ratio of the three-phase stress debt service ratio (DSR) scheduled to be implemented in July, observing the circumstances of the Financial Services Commission and the local construction market in April and May.