Housing supply measures needed for Seoul and the capital region

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Housing supply measures needed for Seoul and the capital region

Published: 25 Aug. 2025, 00:04

Audio report: written by reporters, read by AI

Kwon Dae-jung

The author is a professor at the Sogang University Graduate School and chair of the Reset Korea Real Estate Committee.

In late June, just before the government unveiled its first real estate measures, housing prices in Seoul were rising. According to data from the Korea Real Estate Board for the week ending June 23, apartment prices in Seongdong District, eastern Seoul, rose 0.99 percent, the steepest weekly increase in the city. In the south, Songpa District recorded a 0.88 percent rise. With most districts across the capital posting gains, the government announced its June 27 package aimed at curbing apartment prices in Seoul and the capital region by tightening restrictions on mortgages and jeonse (lump-sum deposits).

The measures took effect immediately the following day and quickly influenced the market. By mid-August, the Korea Real Estate Board reported that Seongdong’s weekly price growth had slowed to 0.13 percent while Songpa’s had fallen to 0.31 percent. Apartment complexes across Seoul saw buyers step back, transactions decline and price increases moderate. Still, some high-demand properties continued to set record prices, and certain new developments near transit hubs sustained their upward momentum.

A view of apartments in central Seoul from Seoul Sky, the observatory at the top of the Lotte World Tower in Songpa District, southern Seoul, on June 29. [YONHAP]

The June 27 measures, while effective in cooling price surges, have also left some unintended consequences. The decline in buying activity created a pool of pent-up demand, but jeonse supply did not expand. With loan restrictions still in place, the rental market faces renewed upward pressure as the peak moving season approaches. Tenants unable to secure lump-sum deposits are increasingly turning to monthly rent or mixed arrangements, where part of the deposit is converted into monthly payments. Such shifts make it harder for renters without homes to save for ownership and reduce disposable income, straining household budgets.

The fundamental problem with the government’s June 27 measures is their narrow scope. They were designed only to calm surging prices in Seoul, without incorporating a sustainable supply strategy. Effective housing policy requires predictability and continuity, particularly in supply. While demand and liquidity can fluctuate sharply, influenced by financial conditions and market sentiment, supply policies provide stability. The absence of such measures leaves the market vulnerable to recurring cycles of volatility.

The key question is how long the June 27 measures can hold down prices. Before their effect dissipates, the government must act quickly to present a clear supply plan for Seoul and the broader metropolitan region. There is no hierarchy of urgency — what matters is prioritizing areas showing immediate instability and addressing them first.

Several supply options stand out. Accelerating the long-delayed third-generation new towns should be a priority. Within Seoul itself, easing redevelopment and reconstruction restrictions could help bring more housing to market. Urban development projects, such as those around transit hubs, have stalled due to excessive public contribution requirements. Without moderation, no projects can move forward. Rational adjustments to contribution levels would enable stalled projects to proceed. Idle state-owned land and designated development zones, including areas such as the Seoripul area in Sinwon-dong, Seocho District, southern Seoul, must also be brought online without delay.

Equally urgent are short-term supply measures for non-apartment housing. Multiunit buildings and row houses, which can be ready for occupancy within three to six months, offer an immediate way to expand supply. Stronger protections for tenants’ jeonse deposits could unlock more supply in this sector. Another option involves rethinking the treatment of small officetels, which are technically regulated under the Building Act rather than the Housing Act. Excluding them from official housing counts could help encourage the development of units popular with younger residents.

Workers operate at an apartment construction site in Seoul on Aug. 11, as the government begins a crackdown on illegal subcontracting at construction sites. [YONHAP]

Ultimately, regulation has its place, but what matters most is ensuring that housing is available where and when people need it. If direct supply expansion proves difficult, demand-side measures such as tax incentives for households relocating from high-demand areas like Gangnam District, southern Seoul, to other parts of the capital region could help ease pressure.

The government’s initial steps have succeeded in calming runaway prices, but without a credible supply plan they remain a stopgap. For sustainable stability in Seoul’s housing market, supply must become the centerpiece of policy.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.