BOK Hikes Rate to 2.75%, New Home Terms Kept

This marks a second consecutive month of base rate increases, following last month's hike.

A majority of responses projected rates of 3%, 3.25%, and 3.5%. This suggests at least one more rate hike is possible next year.

Bank debenture yields and the COFIX rate have already risen considerably, making a heavier financial cost burden an unavoidable reality.

In the past Changneung new town case, conditions such as interest rates, maturity, and LTV differed between the pre-subscription and the main subscription from what was initially announced, causing controversy. This time, however, the ministry has confirmed it will follow the original conditions, minimizing confusion.

The approach reduces benefits previously granted to owners who do not live in their homes, regardless of the number of homes they own, and imposes penalties. In particular, there are concerns the joint-ownership deduction could be cut from 1.8 billion won to 800 million won. The government and ruling party are weighing revisions to the tax reform plan in light of worsening public opinion.

The aim is to simplify administrative procedures for redevelopment projects and speed up their execution.

While Seoul sets the overall big picture for the city, the concern is that if individual districts draw up their own redevelopment plans, harmonizing them with citywide planning will become difficult. Seoul's pushback is therefore based on the need to keep city-level control over urban planning when redevelopment plans are formulated.

The purpose of the joint review under Sinsung Planning is to speed up projects by handling various impact assessments at once. In practice, however, the process is creating bottlenecks. To move projects quickly, developers submit token 'placeholder designs,' and then have to go through review again when final plan changes are made, causing delays. As a result, the joint review has turned into a formal step to get projects through, and it is not actually making things faster.

Seoul has proposed developing the Tancheon water reclamation center site as an alternative to Yongsan Park. Supplying housing on the Yongsan Park site would require a public deliberation process and legal amendments.

For third-category residential areas, that would mean expanding the 300% ratio to 360%. Some areas currently have excessively high household density, and without additional floor area ratio through public-led redevelopment, projects in those areas are difficult to advance, so the Ministry of Land needs to consider the proposal favorably.

The Yongsan site is being separately reviewed as a potential source of additional housing, apart from the 73,000 households.

Seoul has proposed using the Tancheon sewage treatment plant site to supply housing. The treatment plant covers about 390,000 square meters, larger than Yongsan Children's Garden. If the site were developed at high density, it could supply roughly 13,000 households, and nearby areas such as SETEC hold an important position as one of the seven wide-area centers in terms of transportation and urban planning.

The plan involves relocating the current sewage treatment plant, supplying housing on that site, and pursuing new urban development.

If the Tancheon treatment plant is relocated, finding a new site will be a major challenge. Sewage treatment plants are classic disliked facilities, and residents nearby are expected to strongly oppose them moving in. Expanding the capacity of existing plants, such as the one in Magok, could also be considered, but that too is likely to meet strong resident opposition.

Even if the Gangnam sewage treatment plant is relocated, the nearby waste incinerator remains an issue. Seoul has four incinerators, and if new apartments are built nearby, complaints from residents about incinerator smokestacks are expected. This would again illustrate the difficulty of expanding or relocating disliked facilities, as in the Mapo incinerator case.

There is a past case in which the Line 4 Changdong depot was relocated to Jinjeob in Namyangju along with a line extension. However, due to opposition from Jinjeob residents, the depot was placed on the outskirts, which caused problems such as longer train dispatch intervals and inconvenient access. Relocating the Tancheon sewage treatment plant could likewise lead to a similar conflict over a disliked facility.

The Yongin Jukjeon sewage treatment plant was put underground with a park built above it, and Daejang New Town is also pursuing ways to use disliked facilities as parks or sports facilities. This model is drawing attention as an alternative that can coexist with the local community and improve perceptions of disliked facilities.