"I wanted to speak about Seoul's housing administration…." "Let's discuss that later."
President Lee Jae-myung and Seoul Mayor Oh Se-hoon, meeting for the first time at a Cabinet meeting since the launch of the ninth popularly elected local government, engaged in a war of nerves over housing policy. President Lee demanded a report on why Seoul's redevelopment, reconstruction, and housing supply had been delayed, while Mayor Oh presented a report arguing that government regulations were blocking supply. As the government's tax-centered demand management stance collided head-on with Mayor Oh's calls for expanded supply and deregulation, observers say the conflict between the Lee Jae-myung administration and Oh Se-hoon's Seoul city government over control of housing policy may be entering full swing.
According to the presidential office and the Seoul city government on the 18th, Mayor Oh twice requested to speak on real estate policy at the Cabinet meeting held at the Blue House on the 14th. Prime Minister Han Seong-sook blocked him, saying, "We will receive opinions in writing," noting that a national public debate was scheduled for the 23rd of this month. When Oh said he would substitute his prepared report for his remarks, President Lee requested, "Please include how Seoul's redevelopment and reconstruction are progressing and why supply volume is insufficient." After the meeting, Mayor Oh said, "The report I prepared contains some uncomfortable content," adding, "Since it was written as debate material, I hope it will be read thoroughly so that diverse opinions can be adopted in a balanced way."
Immediately after the Cabinet meeting, Mayor Oh held a separate briefing at Seoul City Hall and hit back. He directly criticized the current government's understanding of the situation, saying, "It sounded as if the president was unaware that projects are being delayed due to insufficient cooperation from relevant agencies such as the Ministry of Land, Infrastructure and Transport." The next day, he released a video titled "The Story I Couldn't Finish at the Cabinet Meeting," criticizing that the six real estate measures issued since the launch of the Lee Jae-myung administration had instead pushed up housing prices and jeonse and monthly rent prices.
The dominant assessment is that these scenes were less a happenstance than a surfacing of the two men's differing policy lines. The clash between the two sides had already been foreshadowed over the jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) issue. At his first-anniversary press conference last month, President Lee defined jeonse as a kind of private financing that exists only in Korea and assessed the decline in jeonse supply as "a process of normalization." Mayor Oh immediately countered, "The disappearance of jeonse is not a natural phenomenon but a policy disaster caused by the government cutting off the supply line." Oh subsequently even requested a separate meeting with President Lee.
The two men's solutions diverge over the agent of supply and regulation. The government aims to block speculative demand through the June 27 lending regulations and the October 15 expansion of regulated areas and land transaction permit zones, while at the same time planning to break ground on 1.35 million units in the greater Seoul area by 2030 through the September 7 measures. This approach expands the public sector's role through direct implementation by LH and development of idle public land. President Lee also recently indicated a view that ownership burdens need to be raised on ultra-high-priced homes, even for those living in a single home they actually reside in.
By contrast, Mayor Oh counters that housing prices cannot be curbed through demand suppression alone, and that the private sector—which has accounted for more than 90% of Seoul's supply over the past three years—must be unleashed. The Seoul city government believes it can break ground on 310,000 units by 2031 by pushing forward more than 700 maintenance projects, including 472 reconstruction and redevelopment sites and Moa Town projects. To this end, it has requested that the government raise the loan-to-value (LTV) ratio for relocation funds to 70%, ease restrictions on the transfer of union member status, and expand the legal upper limit on the floor area ratio for private maintenance projects to 1.2 times. It also proposed easing lending and comprehensive real estate tax regulations for acquisition-type rental businesses and maintaining the special long-term holding deduction.
The basis for Mayor Oh's head-on criticism of government policy is the "triple rise" in sales, jeonse, and monthly rent. According to the Seoul city government, Seoul apartment sales prices in May this year rose 11% from the same month last year, while jeonse and monthly rent rose 6.8% and 6.6%, respectively. The Seoul city government views that lending and rental business regulations have pushed sales demand into the jeonse and monthly rent market, destabilizing all three markets simultaneously.
Political circles see housing policy as a key battle line through which Mayor Oh—who has emerged as a leading opposition contender after a come-from-behind victory in the local elections—can differentiate himself from President Lee. The problem is that the central government holds finance and taxation while the Seoul city government holds maintenance project permits and urban planning, making supply expansion impossible with either side alone. If the policy contest drifts into a blame game rather than cooperation, it could only increase project delays and market uncertainty.
The real estate national public debate, to be chaired directly by President Lee on the 23rd, is expected to be the two sides' next battleground. The Blue House said it would review the proposals submitted by the Seoul city government. However, it has not scheduled a separate meeting.
