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April 16, 2024

HUD's Historically Significant Partnership With Korea

By IPAD Program Analysts Sarah Lee and Katherine Marinari

The Korean delegation and HUD staff tour the Arthur Capper Senior Apartments in Washington, D.C.
The Korean delegation and HUD staff tour the Arthur Capper Senior Apartments in Washington, D.C. Photo credit: Meron Habte

On April 1, 2024, HUD hosted a delegation from Korea's Ministry of Land, Infrastructure, and Transport (MOLIT). MOLIT Vice Minister Hyun Hwan Jin met with HUD Assistant Secretary Julia Gordon and Principal Deputy Assistant Secretary Solomon Greene, along with Government National Mortgage Association (GNMA) Vice President John Getchis. The participants discussed research topics for the agencies' most recent Memorandum of Understanding (MOU) and the state of housing in Korea and the United States. Following the bilateral meeting, the delegation visited the Navy Yard neighborhood of Washington, D.C., and toured the Arthur Capper Senior Apartments.

HUD's Partnership with Korea

HUD has enjoyed a robust relationship with MOLIT since 2014, when the two established a research MOU to promote the exchange of information on public housing policy for low-income individuals and families, housing market stabilization policy, and sustainable urban development policies, including transit-oriented development and aging in place.

Former HUD Secretary Marcia Fudge and former MOLIT Minister Won Hee-ryong updated and signed HUD's current MOU with MOLIT in October 2023. The updated MOU sets forth the intent of HUD and MOLIT to collaborate on identifying best practices for the economic revitalization of rural and urban communities, researching housing finance policies, and crafting sustainable urban development policies. Through this partnership, both countries will gain a mutual, robust understanding of best practices in policies and programs. The bilateral meeting this week with the MOLIT Vice Minister included discussion of specific research topics that HUD and MOLIT could pursue under this MOU.

The State of Housing in Korea

Housing supply

High-rise apartment buildings are the most common residential building type in Korea, housing 75 percent of the population. Other major housing types in Korea are detached houses and rowhouses.

Korea has been successful in rapidly expanding its housing stock, with the housing supply rate increasing from 100.5 percent in 2010 to 104.8 percent in 2020. Since 2020, however, the housing supply rate has been declining because it has not kept up with the nation’s increase in single-person households. In metropolitan areas and provinces, the housing supply rate fell to 93.7 percent in 2022, the lowest rate in 13 years.

In addition to its declining housing supply, Korea is struggling with rising housing costs. Seven years ago, buying an apartment in Seoul cost 11 times the nation’s median annual income; today, the same apartment costs 18 times the nation’s median annual income. Among Koreans between the ages of 19 to 34, the homeownership rate fell from 19.2 percent in 2017 to 13.2 percent in 2022.

Flood risks

Korea’s monsoon season runs from late June to mid-July, during which rainfall totals can reach more than 30 inches. Climate change has exacerbated these rainfall totals. The death toll from flooding was 30 people in 2022, rising to 46 people in 2023.

Prototype of Busan's floating city.
Prototype of Busan's floating city. Photo credit: UN Habitat and Oceanix

At significant risk are residents of basement apartments in Korea. President Yoon announced that the Korean government would stop issuing permits for basement units, but the nation still has an estimated 327,000 basement and semibasement units, 200,000 of which are concentrated in Seoul alone; 5 percent of all households in the city live in these units. In March 2024, HUD briefed Korean researchers on accessory dwelling units and basement conversions.

To mitigate the effects of flooding and rising sea levels, Korea has collaborated with the United Nations and the development firm Oceanix to unveil its concept for a floating city.

This floating city, located in Busan, would support a population of up to 12,000, with the potential to expand to house a population of up to 100,000.

Modular construction

Korea has invested heavily in modular construction. Its domestic modular construction market reached approximately ₩176 billion in 2022, a fivefold increase from the ₩27 billion size of the market in 2020. The market size for modular construction in 2023 was ₩250 billion, or roughly US$188 million. In the summer of 2023, Hyundai Engineering completed a state-sponsored project to construct a 13-story, 106-unit apartment building in the city of Yongin using modular construction techniques.

Korea also has pursued modular construction projects overseas. Samsung and MOLIT signed an MOU with Saudi Arabia in January 2023 to invest jointly in a modular manufacturing facility in Saudi Arabia. In November 2023, Korea’s POSCO International signed a MOU with Ukraine to use modular techniques for reconstruction projects in Ukraine.

Looking Ahead

HUD's partnership with Korea is significant. Over the past decade, we have shared proven techniques and expertise to meet some of our greatest challenges in housing and urban development. As new challenges arise, engagement under our renewed MOU will offer our countries opportunities to exchange best practices and innovative solutions. Through briefings, site visits, and shared research, we connect leading practitioners from across the United States and Korea to leverage expertise and ideas and increase our impact on our communities. We look forward to continuing our partnership with Korea to further our shared mission of achieving fair and affordable housing for all.

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