The local housing market is recovering slowly, and discussions on reforming the social security system are heating up rapidly.

The Korea Housing Construction Association Gwangju·Jeonnam Province Branch and the Korea Housing & Urban Guarantee Corporation held a symposium on the 23rd to discuss plans to improve the guarantee system in order to alleviate the financial burdens faced by construction companies trapped in a long-term downturn in the regional housing market.

This discussion was conducted against the backdrop of housing construction companies in Gwangju and Jeonnam experiencing a triple burden of sluggish sales, accumulated unsold units, and rising financial costs. When the housing market is frozen, small and medium-sized as well as core construction companies find it even more difficult to bear project costs and interest expenses, and at this time, the guarantee conditions and guarantee fee rates of the Korea Housing & Urban Guarantee Corporation (HUG) directly impact the sustainability of projects. This is because the guarantee system is a core mechanism for lowering the financing barriers for housing projects.

The association requested during the symposium a more reasonable adjustment to the debt ratio standards applicable to lease deposit guarantees. The basis for this judgment is that, in the current period of heavy financial burdens, relying solely on high debt ratios may make it difficult to obtain guarantees, even if the project is operating normally, and cash flow could be hindered. Meanwhile, the association also suggested lowering guarantee fee rates and allowing installment payments for guarantee fees. Since guarantee fees are a fixed cost for operators, reducing the rates or making payment methods more flexible can help ease short-term liquidity burdens.

The Korea Housing & Urban Guarantee Corporation also proposed directions for system improvements. They mentioned plans to improve the lease deposit guarantee system, temporarily lower guarantee fee rates, and enhance the unsold units buy-back scheme. The unsold units buy-back is a mechanism to reduce the burden on operators of unsold housing units and has attracted attention as a risk management tool for construction companies amid a market freeze. Adjustments to such systems by public guarantee agencies can help alleviate local housing project funding pressures to some extent.

The association expressed hope that this symposium would serve as an opportunity to reflect on on-site voices in policy-making. Some comments pointed out that the recovery speed of local housing markets is often slower than that of the capital region, making fine-tuning policies directly related to finance, such as guarantee systems, particularly important. This trend may develop into future discussions on supplementary measures for local housing markets and expanding public guarantee support.