Recharging Housing Industry

Korea Housing Assoc. proposes five conditions to fire up sagging housing market

On July 13, the Korea Housing Association held a discussion session with Minister of Construction and Transportation Choo Byung-jik over housing policies at the Renaissance Hotel in Seoul.
The event was an occasion for the construction industry to make a proposal to the government to draw up a new set of measures including the removal of unnecessary regulations for soft landing of the industry amid the sluggish housing construction and sales of new houses.
Present at the event included on the ministry side, Kwon Do-yop, director-general of the Policy Public Relations Office of the MOCT, Kang Pal-moon, director-general of the Housing and Welfare Headquarters, Lee Jae-hong, director-general of the City Environment Planning, Park Sang-woo, director-general of the Land Planning, Lim Ui-taek, head of the Public Housing Team, and Seo Myung-kyo, head of the Residential Environment Team, all seven MOCT officials attended the session.
For the housing association side, Lee Bang-joo, chairman of the association and vice chairman of Hyundai Development Company, Lee Yong-koo, vice chairman of the Daelim Industry Co., Shin Hoon, vice chairman of the Kumho Industry, Yoon Ho-soo, standing vice chairman of the association, Kwak Jeong-hwan, chairman of the Daedong Housing Co., Cheon Young-woo, president of Daewon Co., Lee Sang-dae, president of Samsung Co. construction division, Yoon Moon-ki, president of Shinsong Construction Co., Lee Pil-sung, Punglim Industry Co., Kim Hyun-jung, president of Hanhwa Construction Co., and Lee Jong-soo, president of Hyundai Construction Co., all eleven attended the meeting.
Minister Choo, in his opening speech, said the ultimate stability of the housing market is to increase the number of housing construction and disperse the demand concentration around the country now limited to few regions. He would like to ask builders to raise public residential quality standard and better quality houses.
The minister continued that the housing demand has changed from speculative one and stable housing conditions is being settled with the construction of new towns in northern Seoul and new cities around the country. At this juncture, we ought to prefer to have quality-oriented housing supply to upgrade the housing market up a notch.
Chairman Lee of the association, in his remark, said the housing market and the construction industry have been going through rough times due to sluggish sales of houses and with markets for bonds, stock, and real estate groping for revitalizing measures. If policies to cool down the construction market have been pursued up until now, it is time now to pursue policies to recover the market, chairman Lee said.
He went on to say that the MOCT announcement showed that there are 420 to 440 houses per 1,000 residents in foreign countries, but the number is 280 houses per 1,000 residents in Korea, calling on the government to come up with policies to spur the construction of houses. He also said the construction industry does not want speculators to tarnish the housing market, but they want the market to be moved by supply and demand principles. Shin Hoon, vice chairman of Kumho Construction, said the current housing policies would increase financial burden on low-income people and real customers, although they could bring down the high prices of residential houses. He reminded that the number of unsold houses has reached the five-year peak.
Vice Chairman Lee Yong-koo of Daelim Industry said the construction industry needs to supply good-quality houses and also expand the houses for low-income people. He also called on the government to relax the regulations that the construction industry requested as many construction firms in the local provinces are likely to face extreme financial difficulties due to sluggish housing sales across the country. He said media reports have been saying that construction companies have been collaborating with speculative investors to jack up the prices of houses, but they are wrong. In fact, housing builders have been doing all they can to bring down the costs.
President Lee Sang-dae of Samsung Trading Construction Div., said the supply of housing should be continued to stabilize the housing market, but it is hard to do so due to a number of difficulties and they should be removed, along with administrative measures to reinvigorate the housing market.
Chairman Lee noted that the raising the restrictions on building space and the heights would be tantamount to two-tier regulations and asked the minister if they are excessive policies. Minister Choo replied that under current regulations, builders will be able to build apartments with more than 20 floors since the current regulations specify that apartment buildings with average heights of 16 floors can be built.
Vice Chairman Yoon Oh-soo of the association said the legislation of the standard for the construction of model houses is like making house builders law violators and asked the minister to ease it to the level of administrative guidelines. Excessive regulations would not help the efforts to stabilize the housing market.
Chairman Lee also said the idea to legislate the model house construction into law is connected to a negative understanding of construction companies and even as of now, there many accusations that apartments are not built like their models and if the building model houses is legislated into law, the construction firms would have hard time managing their normal operations.
At the close of the session, Minister Choo remarked that the government will push its housing construction policies through the development of land and the development projects for large new cities will be kicked off. It would be hard for civilian developers to undertake the development of the land for construction of houses. He said he hoped the construction companies will positively participate in the large government construction projects such as the project to build the administrative city, new cities and new towns in northern Seoul, including Dongjak, Gwanak, Guro, and Yeungdungpo wards. He said the government will try hard not to cool off the construction market severe enough to scale down the construction industry.
The association has proposed five items at the session including measures for soft-landing of the residential housing construction business, relaxation of regulations on the supply of reconstructed residential housing, the reimbursement of financial expenses of land applied to the sale of residential housing, and improvement in the designation system of land reserved for the housing construction and the suspension of the move to legislate the model housing construction into law.
The association also strongly urged the government to rapidly push the draft laws submitted to the National Assembly for their approval including the improvement of the system for request to buy land reserved for residential housing construction, the ban on name change on joint residential housing complexes, and the relaxation on requirement to expropriate land reserved for the construction of residential houses as part of the revision of the law on the municipal development projects.
The association proposed the lifting of restrictions on housing construction in the areas with overheated housing prices and the areas designated as speculative investment areas to spark the demand for new houses. The association also called on the government to ease the collateral value of mortgage loan to 40 to 60 percent of the assessed value and exempt the houses listed on the registry and sold to a buyer from the regulations.
The association also requested the government to apply the same rate of taxes to the buyer of new houses as the housing transaction between individuals and reduce transaction taxes on multiple house owners, not only on those who don't meet the non-tax requirement, owners of deluxe house owners and one house-one owner to spur housing transactions and changes in residential locations.
The association also noted that the restrictions on reconstruction of residential houses has been shortage of houses, increases in expenses and aggravation of environment and asked for the relaxation on the mandatory regulation on the construction of small residential houses. nw

Korea Housing Association's meeting with officials of the Ministry of Construction and Transportation led by Minister Choo Byung-jik.

Minister of Construction and Transportation Choo Byung-jik

Lee Bang-joo, chairman of the Korea Housing Association and vice chairman of Hyundai Development Company