The South Korean government is accelerating public land development projects, including the third new towns, to expand housing supply in the Seoul metropolitan area. However, as project timelines extend, costs are ballooning by billions of won, raising concerns about the impact on public housing prices and the financial burden on the Korea Land and Housing Corporation (LH).
According to the Ministry of Land, Infrastructure and Transport and LH, the construction period for the A3 block in the Wangsu 2 district of Namyangju has been extended from May 2027 to July 2029, a delay of 26 months. During the same period, the total project cost increased from 333.3 billion won to 486.7 billion won, a rise of 153.4 billion won, or approximately 46%.
The A1 block in the same Wangsu 2 district also saw its timeline pushed back by 21 months, with costs rising from 373.6 billion won to 427.1 billion won, an increase of 53.5 billion won. The combined cost increase for these two blocks exceeds 200 billion won.
Similar trends are evident in the main Wangsu district of Namyangju, where the total project cost for the A1 block rose from 242.9 billion won to 321.0 billion won, an increase of 78.1 billion won. The project timeline was also extended from the end of 2026 to March 2028, a delay of 15 months.
In Incheon’s Gyeyang district, project delays and cost increases are also occurring. The A10 block's timeline has been pushed back from June 2028 to June 2029 due to the need for ground reinforcement, with costs rising by over 10 billion won. The A17, A18, and A19 blocks have also seen cost increases.
In projects where pre-sales have already occurred, rising costs have translated into higher sale prices. For instance, the total project cost for the A2 block in Incheon Gyeyang increased from 267.6 billion won to 336.4 billion won, a rise of about 26%. The A3 block saw costs rise from 175.4 billion won to 235.5 billion won, an increase of over 30%. The rising construction and project costs have led to greater financial burdens for prospective buyers compared to initial estimates.
Similar phenomena are occurring outside the third new towns. The A22 block in Yangju Okjeong saw its total project cost rise from 398.5 billion won to 560.9 billion won, an increase of 162.4 billion won, with the completion date pushed back by a year. Other blocks in Uiwang and Paju have also experienced cost increases ranging from hundreds of millions to around 1 billion won.
The reasons for the cost increases are not solely due to project delays. A combination of rising raw material and labor costs, ground reinforcement needs, design changes, stricter safety standards, and increased compensation costs have all contributed. However, as project timelines extend, the potential for additional costs due to inflation and rising construction expenses increases, highlighting the importance of effective schedule management.
In fact, in the third new towns, delays due to the removal of obstacles, land compensation, and cultural heritage investigations have become common. The S-18 block in Namyangju Wangsu was delayed by 19 months due to obstacle removal, while the S-3 and S-4 blocks in Goyang were each delayed by 15 months. The A10 block in Incheon Gyeyang was extended by 12 months due to ground reinforcement.
The government has identified reducing project timelines as a key objective in its housing supply policy. Last month, it announced a 'Rapid Housing Supply Plan' aimed at streamlining the approval, compensation, and site preparation processes for new public land projects to reduce the time required for construction to begin. LH plans to deploy over 300 personnel to expedite compensation processes for metropolitan supply projects, aiming to shorten the compensation period by more than 20 months.
An official from the Ministry of Land, Infrastructure and Transport stated, “The reasons for delays in individual projects have led to unavoidable extensions in timelines, and the increase in construction costs has resulted in higher project costs. To supply homes for sale, we need to start construction, and we will work to resolve the issues of delayed approvals to expedite the construction timeline.”
* This article has been translated by AI.
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