The real estate market is difficult to read, and securing a home is equally challenging. The government's policies are no exception. This is where the complexity of real estate begins.
The June 3 local elections have concluded, with 16 metropolitan leaders elected. Changes in administration occurred in 13 regions, while only three—Seoul's Oh Se-hoon, Gyeongbuk's Lee Cheol-woo, and Gyeongnam's Park Wan-soo—will continue their current policies. Most elected officials will soon take office, but the transition teams are already at work. During their campaigns, promises were evaluated based on whether they were included in plans. Now that they are elected, the focus shifts to what they are doing to ensure those promises are incorporated. The real estate market operates on actions, not just promises.
Unfulfilled Rail Promises; Efforts for Inclusion in Fifth Plan Have Begun
The most urgent issue is rail development. Key projects proposed by elected officials are not included in the currently established Fourth National Rail Network Construction Plan. These include the new GTX-E, F, G, and H lines proposed by Gyeonggi's Choo Mi-ae, the BuTX and TRX connections to the new Gadeok Airport proposed by Busan's Jeon Jae-soo, and extensions of the CTX main line in the Chungcheong region, among others. Many of these projects are outside the Fourth Plan.
For these lines to commence, they must be included in the forthcoming Fifth National Rail Network Construction Plan, which is expected to be outlined soon. The Ministry of Land, Infrastructure and Transport is currently assessing candidate routes through preliminary feasibility studies and demand forecasts, meaning the transition teams must act quickly. Without organizing feasibility studies and consulting with government departments, it will be difficult to get on the candidate list. The Fifth Plan will likely yield the fastest results in the first year of their terms.
A prime example is the southeastern region. Elected officials Jeon Jae-soo from Busan and Kim Sang-wook from Ulsan are from the Democratic Party, while Park Wan-soo from Gyeongnam represents the People Power Party. Given the political divide, collaboration is not automatic. The Ulsan-Yangsan-Busan metropolitan railway, initiated under the previous administration, passed preliminary feasibility in July 2025, while the southeastern circular metropolitan railway (Jin-yeong to Ulsan Station) is currently undergoing feasibility studies. Jeon Jae-soo's BuTX and TRX proposals add to the mix. Conflicts may arise over routes, budgets, and priorities within the same southeastern region. Whether these three metropolitan areas cooperate or compete will determine the future of the southeastern mega-city rail network.
'No Tax Burden' Underground Development; Real Estate Projects Start Now
The underground development follows a similar structure. Under the 'Integrated Development of Underground Railways Special Act' enacted in 2024, the first pilot projects in Busan, Daejeon, and Ansan were selected in February 2025. However, the comprehensive plan for underground development has yet to be announced. For additional segments promised by many elected officials in Seoul, Incheon, and Cheonan to move forward, they must first be included in the comprehensive plan. The changes citizens will feel in the next term are likely to be more about 'plan confirmation' rather than 'groundbreaking.' The goal for the first pilot project is set for 2030.
The true nature of the SOC promises lies elsewhere. The structure of the underground rail projects promised by six elected officials is as follows: land contribution for railway sites → issuance of bonds by project implementers to finance construction costs → underground development and above-ground site preparation → high-density development above ground → repayment of bonds through development profits. This means costs will be covered not by taxes, but through sales and rental income from buildings and commercial spaces developed above ground. According to estimates from Seoul City, the project cost is 25.6 trillion won, while the above-ground development profit is projected at 31 trillion won. The development profit exceeds the project cost by 121%. If the development profit decreases by 20%, it will fall to 24.8 trillion won, which would be below the project cost.
Estimating development profits is crucial for assessing project viability. The phrase 'no tax burden' implies a lower financial obligation, not the absence of costs. The real estate market must cover these costs. Elected officials will need to decide on changes to the floor area ratio and zoning for above-ground development, as well as the structure of contributions from project implementers.
The essence of new airport projects is similar. Gyeongbuk Governor Lee Cheol-woo's TK New Airport, Daegu Mayor-elect Choo Kyung-ho's development of the former airport site, the relocation of Gwangju Airport, the Saemangeum Airport, and Busan's Gadeok New Airport all superficially appear to be transportation infrastructure projects. However, the core issue from a real estate perspective is the development of the former airport site and surrounding areas. How the relocated airport site will be utilized remains a key question.
Supply Dwindles While Unsold Units Pile Up; Speed and Scale Will Determine Success
The residential market facing elected officials is at the center of polarization. According to housing statistics from the Ministry of Land, Infrastructure and Transport for April 2026, housing permits in Seoul from January to April totaled 12,760, a 24% decrease from the previous year (16,787). Nationwide, completions dropped to 75,230, a 45.9% decline from the previous year (139,139). A decrease in permits now means fewer move-ins in two to three years. Completions have already halved. Meanwhile, of the 65,179 unsold units at the end of April, 47,881 (73%) were in provincial areas, and of the 29,504 completed but unsold units, 25,166 (85.3%) were also in provincial areas. A critical signal is that while unsold units in the metropolitan area decreased by 1,314 in April, they increased by 1,210 in provincial areas, indicating a deepening divide where new constructions are drying up in the metropolitan area while unsold homes accumulate in provincial regions.
The first task for the new city and provincial administrations is clear. How will they prevent the cliff of permits and groundbreaking in the metropolitan area, and how will they address the growing unsold inventory in provincial areas? The solutions to these two issues are not the same. In the metropolitan area, accelerating the processing of permits for redevelopment projects, regulating sale prices, and revitalizing urban redevelopment projects are immediate strategies. Incheon Mayor-elect Park Chan-dae has promised urban projects like Camp Market mixed-use development and Dongincheon administrative center development, while Gyeonggi Governor-elect Choo Mi-ae's GTX and new town supply, along with Seoul Mayor Oh Se-hoon's push for faster redevelopment projects, should all respond to the permit cliff.
Conversely, addressing unsold inventory is the priority in provincial areas. This requires activating rental programs for unsold units, adjusting sales timelines, urban renewal in provincial metropolitan areas, and reallocating supply to areas with confirmed demand. The first reality facing elected officials Jeon Jae-soo from Busan, Heo Tae-jung from Daejeon, and Kim Sang-wook from Ulsan is the unsold inventory that has already accumulated before their new promises.
New housing models are one of the tools to address this issue. Oh Se-hoon's land lease apartments and support for non-apartment construction, Park Chan-dae's citizen REITs and Incheon-style social housing, Jeon Jae-soo's public SPC land lease, and Sejong Mayor-elect Cho Sang-ho's basic housing for youth are all part of the solution. However, if these models take 2-3 years to be implemented in a market already facing permit and unsold unit issues, they will not provide answers to the diagnosis. The restructuring of SH, LH, and urban corporation regulations, the establishment of funding, land acquisition, and the initiation of pilot projects must all begin concurrently from the transition team stage. The speed and scale of implementation will determine the market's fate. Models providing 1,000 to 2,000 units annually will fall short of addressing the declining move-in volume in Seoul.
* This article has been translated by AI.
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