Government to Supply 90,000 Homes in Capital Region, Targeting Rental Market Stability

The government will supply a total of 90,000 housing units in the Seoul metropolitan area over two years, from 2026 to 2027, by directly purchasing them for rent. This measure comes as recent increases in housing andJeonse (lump-sum deposit) prices have intensified difficulties for tenants. In a situation where an immediate increase in apartment supply is challenging, the plan is to alleviate housing instability by having the government purchase existing villas and officetels from the private sector and immediately release them into the market. On May 22, the Ministry of Land, Infrastructure and Transport announced the 'Capital Region Purchased Rental Housing Expansion Plan,' detailing the supply of 90,000 purchased rental units over the next two years. Over 70% of the supply, totaling 66,000 units, will be concentrated in regulated areas within Seoul and Gyeonggi Province. Previously, the Korea Land and Housing Corporation (LH) had to purchase entire buildings, but now 'partial purchases' of 20-50 units within a single building will also be allowed.

A shortage of apartment supply in the capital region is worsening. According to RealEstateR114, the number of planned apartment completions in Seoul for 2025 (excluding rentals) is 11,349 units, the lowest level since related statistics began in 1999. Data from the Korea Real Estate Board shows that the average actual transaction price for Jeonse in Seoul apartments in March 2024 rose by 1.36% from the previous month, marking a record high since statistical compilation began in 2014.

Amid this situation, Ham Young-jin, head of the Real Estate Research Lab at Woori Bank, analyzed that the 66,000 units, averaging about 30,000 units annually, are primarily aimed at preventing a surge in monthly rents and filling supply gaps for non-apartment housing, rather than directly lowering Jeonse prices. He pointed out that if public entities take on unsold inventory, it could lead to the side effect of prolonging the survival of some distressed projects and expanding fiscal burdens.

However, concerns are being raised that it will be difficult to fundamentally alter the overall supply shortage and rising Jeonse price trend in the capital region, and that the financial health of LH, which has significant debt, could deteriorate further. The Gwangmyeong-Siheung district, the largest among the third new towns, is planned for approximately 67,000 units, with land compensation appraisals nearing completion. Lee Eun-hyung, a researcher at the Korea Institute for Construction Policy, stated that accelerating the supply schedules for third new towns and public housing sites to translate into actual market stabilization will be key.