South Korea's Lee Administration Unveils Major Housing Policy Shift: Government-Led Development Over Private Land Sales
The Lee Jae-myung administration announced its first major real estate policy on September 7th, 2025, marking a revolutionary shift from private-sector-led housing supply to a government-controlled approach. For American readers, imagine if the federal government decided to directly build housing developments instead of selling land to private developers - a move that would fundamentally reshape the housing market dynamics.
Deputy Prime Minister and Finance Minister Goo Yoon-cheol presided over a real estate ministers' meeting at the Government Complex Seoul, unveiling the "Housing Supply Expansion Plan." The core change involves Korea Land and Housing Corporation (LH), the state housing developer, transitioning from land sales to direct housing development, essentially becoming the primary housing developer rather than just a land supplier.
Ending Land Sales: A Fundamental Structural Change
The government plans to amend the Korea Land and Housing Corporation Act to codify the principle that "housing land developed by LH will not be sold to private entities." This represents a seismic shift in South Korea's housing development model, comparable to how the Tennessee Valley Authority transformed regional development in the United States during the 1930s New Deal era.
President Lee Jae-myung had previously criticized the existing system in a June cabinet meeting, stating that "LH's structure of developing land and selling it to private entities appears more like land speculation than housing price stabilization." For American readers familiar with concerns about housing affordability, this criticism mirrors debates in the U.S. about whether government involvement in housing should focus on direct provision or market facilitation.
Of LH's 199,000 housing units worth of metropolitan area public housing land, 60,000 units will be developed through direct implementation rather than land sales, with groundbreaking scheduled through 2030. Construction companies will be able to attach their brand names to these developments, maintaining private sector participation incentives.
Massive Supply Expansion: 1.35 Million New Units by 2030
The government announced plans to break ground on 270,000 new housing units annually in the Seoul metropolitan area over the next five years, totaling 1.35 million units. To put this in American perspective, this would be equivalent to adding the entire housing stock of cities like Phoenix or Philadelphia over five years, representing 1.7 times the recent three-year average supply volume.
For American readers, this scale of government-led housing development is unprecedented in modern market economies, more closely resembling Singapore's Housing Development Board model, which has successfully housed over 80% of Singapore's population in government-developed units.
Alongside supply expansion, the government announced stricter lending regulations. Loan-to-value (LTV) ratio caps will be tightened in regulated areas including Seoul's three affluent districts (Gangnam, Seocho, Songpa) and Yongsan District.
Real estate experts remain skeptical about the policy's immediate impact, noting that even immediate groundbreaking would result in move-ins no earlier than 2028, considering construction timelines. The 2025 real estate market finds itself shrouded in uncertainty, with upward and downward price factors engaged in intense competition.
The policy represents the Lee Jae-myung administration's first major real estate initiative, fundamentally shifting from a private-sector-led model to public-sector leadership in housing development. For American readers interested in housing policy, this Korean experiment offers valuable insights into alternative approaches to addressing housing shortages.
Read the original Korean article: 이재명 정부 첫 부동산 대책, LH 직접 시행으로 주택공급 패러다임 전환
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