The Korean government announced its second-half economic growth strategy on the 14th, outlining measures to accelerate housing supply while managing loan-driven demand at appropriate levels. The strategy aims to streamline regulations for faster housing delivery through redevelopment projects while preventing speculative loan funds from flowing into real estate through policy loan volume management. The dual approach reflects the government's effort to balance supply-side deregulation with demand-side financial controls in the real estate sector.
Government Lowers Remodeling Approval Threshold to 70%
The government will ease the consent rate for remodeling project plan approval from 75% to 70% in the second half. This follows last year's September 7 policy package, which lowered the consent rate for reconstruction association establishment approval from 75% to 70% through subsequent legislation.
Construction Timeline Accelerated for Third New Towns
The government plans to start construction on 12,000 units in third new towns during the second half. Construction schedules for major urban supply sites including Taereung and Seongnam will be moved up by one year to 2029. Site preliminary surveys and relocation plans will be expedited.
Public land development will accelerate by reducing consultation periods related to district designation and proceeding with or advancing procedures at each development stage simultaneously.
Public Rental Quality Enhancement and Jeonse Stabilization Measures Announced
To stabilize the rental market, the government will improve public rental quality while expanding supply for young people. A new public purchase rental REIT will be established to acquire existing properties and provide them as rentals.
Jeonse deposits will be managed by the Jeonse Stabilization Organization. The government will also promote a secure trust business that allows landlords to receive monthly income.
For fair taxation, the government will gather public opinion on real estate transaction and property taxes to develop reasonable improvement measures.
Policy Loan Requirements Reformed with Volume Management
The government will continue separating real estate from finance. Loan regulations on speculative non-resident single-home owners will be strengthened, and DSR application will be expanded to block speculative fund inflows. The burden on high-risk mortgage loans will be increased through institutional improvements that internalize social costs.
Policy loan income requirements will be reformed to rationalize support conditions while managing total volume. To prevent loan demand from concentrating on funds during interest rate increases, interest rates will be flexibly adjusted to maintain an appropriate gap with banks' own mortgage rates.
The government will gradually reduce jeonse loan guarantees by lowering policy guarantee ratios except for homeless youth and vulnerable groups. Requirements for jeonse deposit return guarantees will also be reasonably improved.
The government will encourage land use for production activities through corporate tax burden normalization and expanded industrial complex rental supply. The Farmland Act, which mandates disposal of farmland not used for agriculture, will be implemented from August.
FAQ
What changes did the government announce for remodeling project approvals?
The government will lower the consent rate for remodeling project plan approval from 75% to 70% in the second half.
How many housing units will start construction in third new towns during the second half?
The government plans to start construction on 12,000 units in third new towns during the second half, with construction schedules for major urban sites moved up to 2029.
What loan regulation changes will the government implement?
The government will strengthen regulations on speculative non-resident single-home owners, expand DSR application, increase burdens on high-risk mortgage loans, reform policy loan income requirements, and manage total loan volume while maintaining appropriate interest rate gaps with commercial bank mortgages.
