A dictionary definition of “new town” is a “planned urban community designed for self-sufficiency and providing educational, commercial and recreational facilities for its residents.” As such, it differs from “settlements that evolve in more ad hoc fashion.”
Britain began to build new communities under the New Towns Act of 1946. Many other countries, borrowing from Britain, have since launched similar projects. Among them is Korea, whose first new town projects began in Seoul in 2002.
A careful comparison with a model new town, built in the abovementioned manner, would be needed to determine how well Korea’s new town projects fit in with the dictionary definition. But one thing is clear: The profit motive, missing from this dictionary definition, was prominent, or even foremost, in the launching of new towns, first in Seoul and later in Seoul’s suburbs and other cities as well.
Residents welcomed the new town projects in Seoul’s metropolitan area in anticipation of a stronger property boom that would follow. They proved to be “geese laying golden eggs,” with the designation of a district as host to a new town alone bringing 100 million won to 200 million won to each family in the district. No wonder many districts competed among themselves in their lobby for new town projects.
The property boom continued, and housing prices rose at the mere mention of a possibility about a residential district being designated as the site for a new town. No wonder the first three pilot projects had mushroomed to 331 designated districts in Seoul alone until Mayor Lee Myung-bak of the Grand National Party was succeeded by Oh Se-hoon of the same party when his term in office ended in 2007.
The Grand National Party, which elected Lee Myung-bak to the presidency in December 2007, carried Seoul and its surrounding province of Gyeonggi in the April 2008 parliamentary elections on a promise to speed up the new town projects that had been on the drawing board.
Soon came the global financial crisis, which drove home prices into a tailspin. New town projects came to a halt, with no ground broken for 85 percent of them.
Now residents in many of the designated districts are demanding the government call off the new town projects. With the property market showing few signs of recovery, they have a long list of complaints. First among them is the likelihood that they will have more to lose than to gain when the new town projects are launched as scheduled.
The reason is that construction costs remain high when home prices have fallen sharply. Moreover, the government finds it extremely difficult to prop up the housing market. Permitting prospective homebuyers easier access to mortgages is inconceivable at a time when the level of household debt is already dangerously high. On the contrary, the government is being pressured to tighten the terms of home financing.
Another problem is that many of the designated districts are exposed to a threat of degenerating into slums, with few crumbling homes being remodeled. In addition, home transactions are slow with the exercise of property rights restricted in the designated districts.
The simmering anger in the districts is a nightmare for lawmakers of the ruling Grand National Party, which jumped on the new town bandwagon in the 2008 elections in Seoul and Gyeonggi Province. They appear determined to do anything if it is deemed helpful for their reelection.
A case in point is their unashamed push for the passage of legislation permitting the government to subsidize the new town projects and easing regulations to make it possible to build more apartments in the designated districts than previously permitted. But the lawmakers will have to fend for themselves, because no such unwarranted measures can be taken.