Due to the limited residential areas and expensive land cost, cities in Korea seem to have a unique formation of high-density multi-family housing estate. On the other hand, the proportion of low-rise residential areas is declined as the number of multi-complex housings is increased by 13 times larger than previous years resulting monotonous apartment housing types. This phenomenon allows people to reflect different ways of residential areas. However, as the importance of developing small-unit blocks stands out, thoughtless reconstruction of residential areas may disturb sustainable infrastructures, economic growth and corporate activities of the city. Therefore, the government encourages the diversification of urban housing, especially in compact residential areas, through providing institutional strategies such as Happy House in Seoul and Housing for Urban Lifestyle policies. Still, the majority of policies are focused on a formation of low-income residential areas, but the patterns of residential housing types are not much considered to be developed due to the lower economical land value. So, this paper reveals housing plans and policies of the government, examining its trends and prospects to solve current problems of low-rise residential areas. Also, through the analysis of current policies provided by the government, a careful improvement scheme will be determined to explore related factors and limitations. As a result, to design more sustainable communities, an appropriate implementation of such policies and regulations is required to prevent related urban and social housing problems.