Fiscal instruments for sustainable maintenance of apartment housing in Korea

Abstract

The tendency in Korea for new construction has contributed to a surplus supply of housing due to the construction of a tremendous stock of houses in a short period of time under government-led housing supply policies. Since the 2000s, driven by excessive construction and social changes such as the improvement of living quality, national housing has seen a surplus with indications as high as a 110 percent increase in the rate of supply. In addition, because approximately 80 percent of existing apartment houses are nearing 20 years from initial construction, remodeling is anticipated to emerge as an important issue going forward. The apartments of Seoul, as well as first generation new cities such as Bundang and Ilsan, are reaching the point of 20 years from initial construction, and thus a period requiring extensive remodeling for repairs and improvement is approaching. Financial support in the form of loans, subsidies, and tax incentive programs impelling the maintenance of existing apartment houses is urgently needed. This study proposes a financial support plan for the maintenance of apartment housing in Korea through comparison and analysis of financial support systems such as loans, subsidies, and tax incentive programs in New York City and Tokyo.