The Korea Land and Housing Corporation (LH), a key agency in the government's housing supply policy, is grappling with the simultaneous challenges of expanding supply, improving its financial structure, increasing staffing, and reorganizing. LH announced plans to begin construction on 96,000 housing units nationwide this year, but as of early October, the actual construction rate for public housing was only 25.7%.
During a National Assembly audit on October 12, lawmakers focused on delays in housing supply, rising debt, financial structure post-reorganization, and staffing shortages. Both ruling and opposition parties questioned whether the government had the necessary organization and resources to significantly expand LH's supply role.
LH plans to start construction on 96,000 units this year, including 86,000 in the metropolitan area. The agency aims to increase direct implementation of projects instead of selling public land to private developers, while also streamlining the processes of permitting, compensation, demolition, and site preparation.
Lee Seong-hoon, president of LH, reaffirmed the commitment to quickly supply more public housing to stabilize the housing market. However, the actual pace of construction has fallen short of targets. As of October 2, LH had begun construction on only 13,293 units, which is 25.7% of the annual goal of 51,783 units. To meet the year-end target, LH needs to start an additional 38,490 units in the remaining months.
Lee expressed confidence in achieving the year-end goal, stating, "While the current performance is lacking, calculations show it is achievable." He noted that most projects are in the contractor selection phase and that many could begin construction soon after selection. He also mentioned that private participation projects are nearing selection of preferred bidders, with many expected to start construction in November or December.
However, he acknowledged the issue of construction being concentrated at the end of the year, stating, "I regret that the volume is concentrated at year-end," and indicated plans to consider spreading out the supply schedule in the future.
In addition to this year's supply goals, LH is also burdened by a backlog of delayed projects. As of August, there were 209,270 housing units that had received project approval but had not yet begun construction. This includes 23,802 units approved before 2022 that remain unstarted.
To increase the pace of supply, LH needs additional staff, but the number of employees has actually decreased. In 2020, when the annual housing supply target was around 60,000 units, LH had approximately 7,100 regular employees. That number has now dropped to 6,398, even as the volume and complexity of projects LH must handle have increased.
Lee stated, "The volume of projects has increased, and the types of projects have become very complex," emphasizing the need for significant recruitment. He has requested the government to actively support staffing increases.
The financial burden is an even greater challenge. LH's debt is projected to rise from approximately 197 trillion won this year to 372.8 trillion won by 2030. This increase is due to LH shifting from selling public land to directly constructing housing, which requires LH to initially bear the costs of land development and housing construction.
Recent surges in construction costs have also diminished the profitability of development projects. Lee explained, "Prices have risen significantly over the past few years, but construction costs have risen even more," noting that apartment construction costs have increased by nearly 50%, leaving little profit from development projects.
He added, "Analysis shows that the rate of debt increase is rapid while recovery is slow," and he has called for financial support from the government.
Additionally, structural deficits in the rental housing business were a point of contention during the audit. LH's rental business losses increased from 1.79 trillion won in 2021 to 2.73 trillion won last year, raising concerns that expanding public rental supply could further increase financial burdens.
* This article has been translated by AI.
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