The Lee Jae-myung administration is implementing various regulatory policies to achieve its goal of stabilizing housing prices. A wide range of policies aimed at breaking the "real estate invincibility myth" are being rolled out, including the one-household-one-home policy, regulations on multi-home owners, lending restrictions, regulations on non-resident homeowners, and the abolition of the long-term holding special deduction. However, current market conditions are not favorable. The government faces multiple challenges, including concerns about inflation caused by liquidity expansion from livelihood recovery subsidies, expanded budget allocations, and supplementary budgets related to the Middle East war, as well as rising construction unit costs driven by higher building expenses.
Nevertheless, government intervention in the market is likely to expand further. This is because of political rewards such as election results and the perceived effects of regulation through short-term statistics. The pain caused by the paradox of regulation ultimately falls on ordinary citizens. Policies to prevent these side effects are also needed. In the past, the construction of the first-generation new towns brought about a decade of housing price stability. Ultimately, in the current administration as well, minimizing the side effects of the regulatory paradox requires swiftly advancing the already-planned third-generation new town projects so that supply is delivered on time.
Are the third-generation new towns actually progressing as planned? The third-generation new towns are public housing site projects undertaken by the Korea Land and Housing Corporation (LH) and the Ministry of Land, Infrastructure and Transport (MOLIT) to expand the housing supply base in the Seoul metropolitan area. They are projects that can contribute to housing market stability in the medium to long term. The government and LH presented a timeline of pre-subscription in 2021-2022, main subscription in 2023, and first occupancy in 2025. According to the plan, Incheon Gyeyang was scheduled for main subscription in 2023 and occupancy in 2025. Had that volume entered the market last year as planned, market stabilization effects could have been expected. However, the schedule for the third-generation new town projects could be delayed beyond the original plan. According to the official third-generation new town website, Incheon Gyeyang is scheduled for completion in 2026, Namyangju Wangsuk and others in 2028, and Goyang Changneung and Bucheon Daejang in 2029. The main subscription, groundbreaking, and occupancy timing — when real estate market stabilization effects can be expected — will be pushed back even further. These project delays represent a structural problem that has been accumulating since around 2023.
To ensure that apartment supply in the third-generation new towns occurs at the right time, the following problems must be resolved. First, there are delays in land compensation, relocation, and demolition. At an inspection meeting in April this year, MOLIT explained that it is working to shorten permit and compensation periods and accelerate relocation and demolition to expand public housing site groundbreaking in the metropolitan area by 2030. The ministry also mentioned land compensation cooperation incentives and financial sanctions against those who refuse to vacate as legislative agenda items to speed up projects. However, supporting measures have not been implemented due to various circumstances, delaying land acquisition.
Second, preliminary procedures such as permits, environmental impact assessments, and cultural heritage surveys are being prolonged. At the same inspection meeting, the government emphasized thorough process management for cultural heritage surveys, and in the "September 7 Housing Supply Expansion Plan," it stated that it would shorten project periods by more than two years through early-stage strategies tailored to phase-specific delay factors. However, in the actual project process, these preliminary procedures are being delayed.
Third, the installation of regional transportation and infrastructure is being delayed. According to LH's 2026 business report, of the 84 regional transportation measures for the third-generation new towns, 22 have broken ground and four have opened. Although the government has emphasized "transportation first, occupancy later," infrastructure construction in the new towns is falling behind. This is a factor that could weaken initial settlement conditions and market absorption capacity even after occupancy begins.
The government and LH are pushing to sell 7,500 units in the third-generation new towns in 2026 and to begin occupancy at Incheon Gyeyang in December this year. This represents a delay of at least one year from the original plan. While the third-generation new towns have great potential to contribute to long-term housing market stability, if they are delayed beyond the plan, the effectiveness of their supply will inevitably be halved. What is needed now is not only management of project promotion plans and progress, but also thorough management to ensure that groundbreaking, main subscription, and occupancy proceed as planned. Failure to achieve these goals will not only prevent contributions to housing market stability but will also expose the limitations of LH.
