This year's first week of the national audit focused on rising housing prices and supply shortages. Amid a blame game between the ruling and opposition parties over the causes of instability in the housing market, the government acknowledged that it would be difficult to meet this year's housing supply targets in the metropolitan area. The focus of the upcoming National Assembly hearing on the Korea Land and Housing Corporation (LH) on October 12 is expected to shift from policy direction to actual supply execution capabilities.
According to the government and construction industry sources on October 11, the LH hearing by the National Assembly's Land, Infrastructure and Transport Committee will rigorously assess the speed of supply and project management capabilities. LH is the key executing agency for the government's housing supply policy, and its president, Lee Seong-hoon, who took office in July, has prioritized rapid housing supply as a key task.
One of the main topics will be the performance of newly constructed rental housing. LH's target for new rental housing construction this year is 44,359 units. However, data submitted to the National Assembly shows that as of August 11, only 10,044 units had actually begun construction, representing just 22.6% of the annual target. To meet the goal by the end of the year, more than 34,000 additional units must be started in the next four months. On that day, LH announced that it would begin construction on 40,000 units of newly contracted rental housing in the metropolitan area by the end of the year, including over 10,000 units in Seoul.
There are also concerns about connecting supplied housing to actual demand. As of August, there were 2,234 rental units purchased by LH that had been vacant for more than six months without any leasing contracts, a 77% increase from 1,262 units in 2024. During the same period, the overall management volume of purchased rental housing increased by 13.3%. This indicates simultaneous issues of delayed construction and long periods without tenants after supply.
The financial capacity to support expanded supply is also under scrutiny. At the end of last year, LH's total debt reached 173.6567 trillion won, an increase of over 13 trillion won from the previous year. As of July this year, unsold land amounted to 6,189 parcels, valued at 21.8892 trillion won. As LH is expected to increase investments in public housing supply, third-phase new towns, and rental housing policies, delays in cashing out existing land and assets could constrain financial burdens and slow down supply.
The separation of LH's functions is also intertwined with supply issues. The government is pursuing an organizational restructuring aimed at separating land development and housing construction functions from housing welfare and asset management functions. As the role of LH is expanded to facilitate supply, the challenge will be to ensure that there are no gaps in operations during the distribution of personnel, assets, and debts.
Quality control of public housing is also expected to be a contentious issue during the audit. Questions are likely to arise not only about the construction company's responsibility for defects in the Siheung Janghyeon A8 block newlywed hope town, built by Kolon Global, but also about how LH, as the project entity, managed defects and repairs.
Last week, the National Assembly's Land, Infrastructure and Transport Committee hearing on the Ministry of Land sparked debates over the causes of rising housing prices and the direction of government policy. The opposition criticized the current government's real estate policies and regulations for increasing the burden on actual users in Seoul and the metropolitan area. The ruling party focused on the responsibility of Seoul's policies, including reduced supply and the operation of land transaction permission zones.
Despite the blame game over accountability, the government acknowledged that supply performance has not met plans. Hong Ji-sun, the Minister of Land, stated, "It will be difficult to achieve 100% of the housing supply target in the metropolitan area this year," projecting that 80-88% of the planned volume will be achieved by the end of the year. Minister Hong also noted that the rate of increase in housing prices in Seoul is expected to slow down as the year progresses and indicated that the extension of land transaction permission zones will be reviewed based on market conditions.
* This article has been translated by AI.
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