Experts call for deregulation of private redevelopment projects at Lee's housing forum

Experts at a national real estate forum chaired by President Lee Jae Myung on Thursday called for deregulation to accelerate private redevelopment and reconstruction projects as a key measure to expand housing supply.

With expanding supply identified as the top priority for easing a triple surge in home purchase prices and jeonse and monthly rent across Greater Seoul, including Gyeonggi Province, participants said deregulation of private redevelopment projects must accompany an expanded public role to open up genuine private supply channels in urban areas. Proposals were also raised for expanding loan support for youth buyers and redesigning the housing finance system around the needs of genuine end-users.

Jin Mi-yun, a professor at Myongji University's Graduate School of Real Estate, presented these findings as the first speaker at the forum, under the theme "Measures to Expand Housing Supply for Residential Stability."

Jin said the current housing market faces structural risks that could trigger future instability due to a supply cliff. "What concerns me most is not a temporary drop in housing supply, but that the supply chain itself is breaking down," she said. "Since 2022, permits and ground-breakings have declined, pulling down completions and move-ins, while listings in the existing transaction market have also shrunk — accelerating a vicious cycle of rising price pressure and heavier housing costs." She added that the non-apartment rental sector, which underpins the lower rungs of the housing ladder, has contracted sharply, making it urgent to restore the housing supply pipeline.

Jin outlined six directions to address the situation: financial and tax support to revive new construction supply, deregulation to invigorate private redevelopment, faster delivery and better structural design at key sites, greater flexibility in urban and architectural regulations, diversification of rental supply providers, and a stronger public-sector role.

Jin said activating private redevelopment projects — which renew aging housing stock and improve residential environments — is essential, and that bottlenecks persisting across all pre-project stages must be cleared. She said current floor-area-ratio incentives alone are insufficient to drive projects forward, and that bottleneck management is needed across all areas including construction costs, financing, cost-sharing and association disputes — with the approach focused on supply outcomes rather than blanket deregulation.

Jin also said the public sector must go beyond rental supply and expand its role as a market maker supporting affordable housing. She recommended enlarging the public sector's pre-sale portfolio to strategically fill gaps left by private supply and to defend supply levels during economic downturns.

Separately from the six directions, Jin said the effectiveness of regulated-zone designations — including adjustment target zones, speculative overheating districts and land transaction permit zones — should be reassessed. She said the side effects of these regimes, including reduced transactions, lower supply and public inconvenience, need to be reexamined, and that safeguards to prevent a resurgence of speculation upon their removal should be considered in advance.

The forum also heard calls fora new price-based regulation to curb housing demand.

Kim Young-do, a senior research fellow at the Korea Institute of Finance, argued for introducing a "macroprudential management levy." The concept involves an additional tax-like charge imposed on borrowers on top of the loan interest rate as a risk-management fee — targeting high-credit borrowers or those with large mortgage loans.

The idea is to make borrowers pay a cost for the excessive use of loans as a form of social capital. Kim said this would make mortgage demand more elastic, helping to resolve household debt problems while also contributing to housing market stabilization by reducing demand. Revenue collected through the levy would be channeled into inclusive finance resources for low-income, low-credit and vulnerable groups.

Kim had made the same argument at a Financial Services Commission-hosted forum on real estate finance policy on July 15, where he said relaxing current aggregate loan caps or debt service ratio regulations would be difficult from a financial soundness standpoint. He said at the time: "Financial regulators have focused on 'quantity' in their regulatory policy, but if a macroprudential levy is imposed, it will become a tax that adjusts prices — and the effect will be particularly pronounced."

Meanwhile, ahead of a comprehensive real estate package expected to be announced soon, real estate experts had urged before the forum that the day's discussion should not become fixated on tightening regulations. Their view was that home price increases centered on Seoul and the broader metropolitan area reflect a combination of a regulatory balloon effect, supply shortages and anxiety among genuine buyers — making it unrealistic to expect market stabilization from tax reform alone.

Kim In-man, head of the Kim In-man Real Estate Economic Research Institute, said: "The government is focused on increasing the tax burden on owners of ultra-high-priced single homes and multi-home owners, but what the market actually sees as the biggest problem is that apartments priced below 1.5 billion won are rising rapidly, deepening residential anxiety among genuine buyers."

The public policy proposal website "budongsan-toronhoe.kr," which has been operating since Tuesday, had received about 5,600 policy proposals by 9:53 a.m. Thursday — just before the forum began — of which about 2,382 were related to housing finance, including mortgage lending.

Yun Ji-hae, head of the research lab at Real Estate R114, said: "The area drawing the most public complaints right now is loan regulation. Blanket lending restrictions are being applied even to first-time homebuyers with no existing property — and for this group, financial support should actually be expanded to ease their residential anxiety."