"If there had only been some empathy for the strain in the rental market, the sense of distance from the market would have been smaller."
A ruling-party figure said this in a recent phone call with this reporter, referring to President Lee Jae-myung's answers on housing policy at his news conference on the 18th. The moment that left something to be desired came during an exchange about the jeonse system, a Korean lease arrangement requiring a large lump-sum deposit instead of monthly rent. Asked whether he still believes jeonse is a system that should gradually disappear, Lee said, "I recall saying that it would disappear," and left it at that. The point, critics say, is that instead of correcting the wording of the question, he could have narrowed the distance from the market by addressing the housing insecurity facing households that do not own a home and explaining the government's response.
Seen in that light, the plan to supply 1.19 million public housing units, which the government unveiled three days after the news conference, is a welcome measure. It reads as a commitment to address through policy the pain in the rental market that the news conference failed to capture. The "universal public rental" component stands out in particular. Public rental housing, long confined to the idea of homes for low-income and vulnerable groups, now extends to middle-class households that do not own a home, broadening the scope of housing welfare. The government laid out a plan to ease market anxiety by supplying 190,000 mid-sized public rental units by 2030 near subway stations and in city centers, built to a quality comparable to private housing.
Whether this blueprint can be turned into reality, however, remains an open question. The key is sufficient funding. Building quality housing in good locations while keeping rents low carries enormous costs. Question marks remain because the sustainability of the policy can be judged only once the funding plan behind it is spelled out in as much detail as the supply targets.
The National Housing and Urban Fund, the core source of financing, is also under strain. With high presale prices, lending restrictions and slim chances of winning a unit driving an accelerating exodus of housing savings account holders, especially among young adults, the base for building up the fund is steadily weakening. At the same time, the spending the fund must shoulder has grown, driven by the expansion of public rental supply and improvements in quality. Money coming into the coffers is shrinking while the money that must be drawn out is rising.
A Democratic Party lawmaker whose constituency is in Seoul said in a meeting with this reporter that "there is a need to consider a bold approach that increases public housing funding by 10 trillion to 20 trillion won a year for about the next three years, using excess tax revenue and other sources." The remark hints at the ruling bloc's urgency in trying to turn public sentiment on housing. In the end, the success or failure of the policy rests on the details. It is now time to produce answers for putting the supply blueprint into practice.
