Hong Ji-sun, the nominee for Minister of Land, Infrastructure and Transport, initiated a social housing policy during her tenure as the head of the Urban Housing Division in Gyeonggi Province. However, as the final year of the plan approaches, the flagship pilot project has yet to break ground. Ongoing issues with land acquisition and an inadequate financing structure for long-term leases have hindered progress.
According to Gyeonggi Province and the Gyeonggi Provincial Assembly, Hong, while serving as Urban Housing Division head, finalized the '2026 Gyeonggi Province Social Housing Basic Plan' in December 2021, aiming to supply 8,550 social housing units from 2022 to this year.
Social housing is long-term rental housing supplied and operated by social enterprises or cooperatives with public support. Gyeonggi Province has proposed various supply models, including new town village types and community-based models.
However, not all 8,550 units will be newly constructed by Gyeonggi Province. The total includes units supplied by the Korea Land and Housing Corporation (LH) and local governments, as well as existing public rental housing, making direct comparisons with individual new projects challenging.
The pilot project directly pursued by Gyeonggi Province has faced difficulties from the start. Since 2020, the province has sought developers for land-lease social housing but has failed to attract applicants in three rounds of bidding. This issue of securing suitable land and attracting developers has been a persistent weakness in the policy since Hong's tenure.
Hong also participated in establishing the necessary framework. In 2020, she proposed amendments to relevant ordinances in the Gyeonggi Provincial Assembly, laying the groundwork for public support through land leasing, loans, and subsidies for social housing. Concerns were raised in the assembly regarding the scope of support and accountability in case of project failures.
Repeated Bidding but Construction Yet to Begin in Deokpung-dong
Five years later, the flagship pilot project has still not commenced construction.
Gyeonggi Province is working on social housing for young people without homes in Deokpung-dong, Hanam City. In the 2024 bidding process, potential developers withdrew due to disagreements over purchase prices, prompting a reevaluation of the project approach.
The current plan involves social economy entities designing and constructing the housing, which will then be purchased and managed by the Gyeonggi Housing and Urban Corporation (GH) under a 'specialized purchase and lease' model. This year, 29 units are set to be supplied.
According to Gyeonggi Province's comprehensive housing plan for 2026, the Deokpung-dong project is scheduled to begin construction after a contract is signed. However, it has not yet started by the end of the plan's final year.
Choi Kyung-ho, director of the Housing Neutrality Research Institute, emphasized the need to change the land acquisition method. He noted, "While plans are being reviewed, landowners sometimes sell their land to others," suggesting that the public should secure land first before separately soliciting project proposals.
Concerns have also been raised regarding the financing structure, which needs to align with long-term leasing. Social housing relies on long-term rental income to recoup investments, differing from sales projects in terms of cash flow.
Choi stated, "In sales projects, investments can be recouped within 2-3 years through sales proceeds, but for long-term rentals like social housing, it can take over 20 years to recover initial capital." He urged a reduction in the proportion of high-pressure repayment funds and an increase in low-interest, long-term financing.
If Hong is to expand new rental housing supply models, including social housing, upon her appointment as Minister of Land, Infrastructure and Transport, she must address the land acquisition and financing issues that have already emerged in Gyeonggi Province.
* This article has been translated by AI.
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