Government's plan to add more houses

550,000 new houses will be constructed near Seoul by 2011, up 110,000 from the previous new city development plan in order to solve house shortage.

Under the development plan of new cities near Seoul, namely Songpa, Keumdan, Kimpo, Paju, Yangju, and Pyongtaek, the number of apartments will increase by as many as 110,000. As a result, an aggregate 550,000 new houses will be constructed in the metropolitan area by 2011.

The finance and construction ministries are expected to hold a consultation with the ruling party and announce the new real estate stabilization plan tomorrow.

The government managed to boost supply by raising development density in the area; in the case of Songpa, the original development density plan was 170 residents per a hectare, but the government increased the population density by 30-50 people per hectare. Accordingly it expects to add as many as 60,000 new apartments to the existing plan of 46,000.

The plan is understood by some as government’s last resort since its previous property market policies all failed miserably to cool down run-away prices hike. Experts point out increasing house supply will help house shortages for working-class household in the long term, but demand for good houses, which has been on the steady rise, can’t be met with such a plan especially given that housing problems stem mainly from Kangnam area, not from the metropolitan area.

Park Jae-ryong, researcher at SERI, said “what is important now is how many, how big and where the new apartments are built and just supplying new ones will not solve the problem,” and “the government should hammer out a plan which can absorb demands from Seoul people.”