Democratic Party Passes 110 Pending Bills En Masse, Focus on Real Estate Measures

Over 110 Pending Bills Processed En Masse... Real Estate Measures at the Core

The Democratic Party decided on the 13th to move forward with a plan to process over 110 pending bills en masse, including real estate supply measures, during a plenary session of the National Assembly. Real estate-related bills, centering on the expansion of housing supply, are the key agenda items for this session. The opposition People Power Party is strongly opposing the ruling party’s move to pass the bills unilaterally and is demanding a shift in national policy governance from President Lee Jae-myung. Amid the tense standoff between the ruling and opposition parties, political conflict surrounding the exercise of legislative power has once again risen to the surface.

The core of the housing supply bills included in this batch of processing is the expansion of supply through the utilization of idle land within city centers and the alleviation of regulations. In particular, key points include the easing of apartment reconstruction standards centered on the metropolitan area and the increase in floor area ratios (FAR) to promote urban regeneration projects. Additionally, measures were discussed to readjust the detailed criteria for the application of the general sales price cap to secure profitability for construction companies while providing stable subscription opportunities for actual end-users. These bills are intended to swiftly promote various housing construction projects that had been delayed due to regulations, thereby resolving the shortage of housing supply in the market.

Sharp Standoff Between Ruling and Opposition Parties... Demand for Pan-National Negotiations on Economic Measures

A heated debate is underway in the political sphere regarding the direction of the real estate market. The ruling Democratic Party maintains that the swift passage of housing supply bills is essential for stabilizing real estate prices and ensuring housing stability for the younger generation. They expect that by quickly processing the pending bills, they can revitalize the sluggish construction economy and create jobs. Conversely, the People Power Party argues that beyond simply increasing supply, comprehensive deregulation and tax benefits must be accompanied. At the same time, they are urging the holding of a pan-national emergency economic conference to discuss fundamental housing and economic measures.

Views from civil society organizations and economic experts are also divided. The Economic Reform Citizens Alliance, including the People’s Solidarity for Participatory Democracy, criticized that the reduction of the sales price cap and the easing of reconstruction regulations could ultimately stimulate speculative demand in the market. They point out that simply increasing supply without complementary measures to prevent irregular transactions in the real estate market could lead to long-term instability in housing prices. On the other hand, industry groups like the Korea Construction Association actively welcomed the processing of the bills, stating that institutional measures must be prepared to allow construction sites currently at a standstill to resume operations immediately. It is analyzed that legislative measures are urgent even to prevent the chain bankruptcy of small and medium-sized construction companies suffering from rising financial costs and material prices.

Impact on the Real Estate Market and Related Industries

Should the housing supply bills pass, immediate ripple effects are projected throughout the domestic real estate market and the construction industry as a whole. Due to regulatory easing, complexes that had delayed groundbreaking due to deteriorating business feasibility are expected to resume construction, potentially increasing the actual move-in volume by up to 15% within the next 2 to 3 years, according to common industry estimates. This is analyzed as a factor that could slow the rise in housing prices in the short term and stabilize the conversion rate to Jeonse (monthly rent) prices.

Construction companies stand to gain direct benefits in terms of revenue and construction capability evaluations. Large construction companies, in particular, holding numerous reconstruction projects in the metropolitan area, are expected to see improved performance in the second half of the year as they benefit from shortened construction periods and increased project efficiency. Furthermore, as order volumes for cement, steel, and other construction material companies increase simultaneously, improvement in leading indicators for the construction economy is anticipated. The content also includes the flexible adjustment of public housing construction ratios according to market conditions, which is expected to have a positive effect of reducing the subscription guarantee burden on the Housing & Urban Guarantee Corporation (HUG).

Future Legislative Schedule and Market Uncertainty

With the plenary session processing scheduled for the 13th, the specific speed of the legislative proceedings is cited as the biggest variable. If the ruling party forces the passage of the bills unilaterally, the opposition party cannot rule out the possibility of delaying the plenary schedule through obstruction tactics such as a filibuster. Furthermore, even after passage at the plenary session, significant time is expected to be needed before actual supply increases, as additional coordination with government ministries will be required regarding detailed standards during the preparation of enforcement decrees and enforcement rules.

Investors are closely watching the aftermath of the bill's processing. However, in a situation where high-interest rates are prolonging, if homebuyers' purchasing power is not fundamentally restored, the expansion of supply could have the reverse effect of aggravating the unsold inventory glut. Consequently, the prevailing view among market participants is that accompanying support measures in the financial sector—such as easing real estate loan regulations and lowering interest rates—must precede the successful implementation of the housing supply bills. Organic policy coordination between the legislature and the executive branch will be a key factor determining the future course of the real estate market.