The Greater Seoul metropolitan area sits at the heart of the government's Aug. 13 housing supply package. The plan calls for adding more than 230,000 units to the metropolitan area — including 100,000 on newly designated sites — while also moving up ground-breaking schedules on existing public housing developments.
New public housing districts in Seoul's Gangseo and in Namyangju and Gwangju in Gyeonggi Province are all concentrated in the metropolitan area, and project financing (PF) loan-interest support and other financial incentives will be offered to sites that break ground early.
In effect, it amounts to a full mobilization of supply to stabilize housing prices in the metropolitan area.
Expanding supply to ease instability in the metropolitan housing market is a necessary policy. Given that the drop in ground-breakings since 2022 could reduce the number of units available for move-in in the coming years, accelerating the supply timeline is a positive step.
The problem, however, lies in the regions outside the capital. While the package sets a concrete supply target of "230,000-plus units" for the metropolitan area, it offers little in the way of real solutions for the housing markets of Daegu and North Gyeongsang Province.
The challenges facing Daegu and North Gyeongsang Province are the mirror image of those in the metropolitan area. The issue is not a shortage driving prices sharply higher — it is that homes already built cannot find buyers.
Particularly troubling is the accumulation of "hard-core unsold units" — apartments that remain unsold even after completion. The backlog is straining local construction firms and spilling over into PF loan defaults and broader stress on financial markets.
Even so, the situation should not be dismissed simply as oversupply.
The slump in Daegu's housing market reflects a combination of factors: a concentrated burst of past supply, sluggish economic conditions, population decline, and the outflow of young people to the metropolitan area. This is why the problem must be approached not merely as a housing issue but as one of regional economic vitality and demographics.
A deeper concern is that the very foundation for future supply could erode in the process of working through today's unsold inventory.
Housing development takes years — from securing a site and obtaining permits to arranging financing, breaking ground and completing construction. If new projects are suppressed too aggressively because of today's unsold units, a supply shortage could emerge as an entirely different problem a few years down the road.
What is needed is a long-term policy that accounts for both the current overhang of unsold units and future housing demand.
What the regions need, therefore, is not a race to designate new sites as in the metropolitan area. They need concrete prescriptions: how to clear existing unsold inventory, how to reduce the financial burden on distressed project sites, and what financial and tax measures can support genuine end-user home purchases.
If the metropolitan area's core problems are supply shortages and rising prices, the regions' core problems are weak demand and economic stagnation. Even within the same housing market, policy prescriptions must differ according to local conditions.
What Daegu and North Gyeongsang Province are asking for is not special treatment. They are asking that regional realities be reflected in housing policy. Preventing the collapse of regional housing markets is just as important a national housing policy objective as stabilizing prices in the metropolitan area.
If the government is to deliver on its goal of supplying enough housing where people want to live, it cannot keep its eyes fixed solely on the metropolitan area.
Stabilizing prices in Seoul, clearing unsold units and reviving the local economy in Daegu, and building the residential infrastructure needed to retain people and industry in North Gyeongsang Province — all of these must move forward together.
Ultimately, the Aug. 13 package must not stand as a policy that offers the metropolitan area "speed" while effectively telling the regions to wait and see.
What is needed is a regionally tailored housing policy capable of addressing metropolitan overheating and regional stagnation at the same time. The housing markets of Daegu and North Gyeongsang Province are, after all, part of the national housing market — and preventing their collapse matters just as much as reining in prices in the capital.
kbj7653@heraldcorp.com
