South Korea plans to supply 830,000 housing units in Seoul and other big cities by 2025 through housing redevelopment projects led by state-run agencies, marking the largest-scale supply measure yet envisioned by the Moon Jae-in administration.

The Ministry of Land, Infrastructure and Transport on Thursday announced its real estate plan, which aims to provide affordable housing in big cities to meet the demand from young people and to tackle soaring home prices.

“If this measure is implemented without any hitches, it will promptly supply new houses that exceed the market expectation in terms of speed, quantity, location and quality,” said Land Minister Byun Chang-heum as he unveiled the first comprehensive real estate measure since he took office in December.

Of the 830,000 housing units, 323,000 new houses will be built in Seoul and 293,000 in nearby Gyeonggi Province and Incheon. The ministry also set out plans to add over 220,000 new houses in major cities, including Busan, Daegu and Daejeon, which saw hikes in property prices.

The focal point of the new measure is to have public developers, such as the state-run Korea Land and Housing and Seoul Housing & Communities, cut red tape and create fast-track approval processes to swiftly expand the housing supply, according to the minister.

Through the streamlining, the average amount of time that it takes to complete a redevelopment project to transform ramshackle areas into new residential areas will be shortened from 13 years to five years.

As long as state-run apartment builders lead the projects, instead of residents forging contracts with private builders, the owners will be exempted from a tax levied on excess earnings from reconstruction.

This is the 25th real estate policy drawn up by the Moon administration. Previous measures, mainly focused on tougher mortgage restrictions and new real estate taxes, failed to cool home prices over the past four years.

Due to soaring apartment prices, the gap between the haves and have-nots has rapidly grown, resulting in newlyweds and young people struggling to find places to live, especially in Seoul and the surrounding area.

“The ministry will revise the allotment system of new apartments to give more opportunities for newlyweds and those in their 30s and 40s to buy affordable houses,” the minister said.

According to the Citizens’ Coalition for Economic Justice in November last year, Seoul’s apartment prices have surged 58 percent since Moon took office in 2017, which is 4.5 times the increase rate of the combined period of the preceding two administrations.

“The proposed amount of new units is a supply shock level. I am confident that this huge expansion of housing supply will lead to a solid stability in the housing market,” said Finance Minister Hong Nam-ki.

The measure also includes easing of the floor area ratio of residential buildings near subway stations and semi-industrial zones. The government also plans to secure 15 to 20 sites nationwide to add about 260,000 new public housing units.

By Park Han-na (hnpark@heraldcorp.com)