Sanggye Jugong Complex 6-Dongnae Lucky Apartment postponed the reconstruction schedule after the inauguration of the new government
“Necessary measures to compensate for market instability, such as shortening the period of prohibition of transfer of union membership”
As a result of the new government’s policy of easing regulations on real estate, a method to restore the safety diagnosis standards for reconstruction, which has been strengthened by the current government, is emerging as a promising solution. In the market, the asking price of some reconstruction complexes has already risen in anticipation of deregulation, and the number of purchase inquiries is increasing. It is pointed out that complementary measures to stabilize the market should also be prepared.
According to an official from the Ministry of Land, Infrastructure and Transport on the 27th, in the report of the transition committee of the Ministry of Land, Infrastructure and Transport held on the 25th, measures such as easing the safety diagnosis, the first stage of the reconstruction project, were intensively discussed. A high-ranking official from the Ministry of Land, Infrastructure and Transport explained, “We decided to find a policy that can be implemented by an enforcement ordinance without amending the law, such as easing safety diagnosis, focusing on policies that people can feel quickly without increasing market volatility in the short term.”
At the time of the presidential election, President-elect Yoon Seok-yeol promised to exempt from detailed safety inspections for apartments older than 30 years old, and to adjust the structural safety weight from the current 50% to 30% in the safety inspection criteria. It can be implemented immediately by just revising the enforcement ordinance and administrative rules, and there is little room for controversy like the ‘500% floor area ratio’, so it is predicted to be the first real estate deregulation policy under the new government. Expectations are already growing in major reconstruction complexes that will directly benefit. The ‘Sanggye Jugong Complex 4’, completed in 1988 in Sanggye-dong, Nowon-gu, passed a preliminary safety examination in August of last year. This means that it has crossed the first gate of the reconstruction safety diagnosis, which is in the order of ‘preliminary safety diagnosis → precise safety diagnosis → adequacy review’. An official from a nearby real estate agency said, “The asking price for a 58m² dedicated area, which was about 810 million won before the election, has recently risen to 850 million won.”
The ‘Shin Gil Woo-sung 3rd’, completed in 1989 in Singil-dong, Yeongdeungpo-gu, recently passed a preliminary safety examination. An official from a nearby real estate agency explained, “There were no purchase inquiries before the election, but recently, two or three calls a day asking for news about the easing of safety diagnosis regulations.”
Some complexes are trying to postpone the rebuilding project schedule until the new government is inaugurated. The Preliminary Committee for Reconstruction of ‘Sanggye Jugong Complex 6’ in Sanggye-dong, Nowon-gu, Seoul recently sent an official letter to Nowon-gu requesting a postponement of the adequacy review. This means that the new government will ease the weight of structural safety evaluation in the adequacy review process and then allow the relevant procedures to be followed. ‘Dongrae Lucky Apartment’ in Oncheon-dong, Dongnae-gu, which is considered one of the biggest words for reconstruction in Busan, also decided to delay the preliminary safety diagnosis procedure after the new government was launched.
As the deregulation measures take shape and market expectations grow, some are concerned about short-term market instability. In fact, as of the 21st survey, in the weekly apartment price trend of KB Real Estate LiveOn, the increase rate of apartment sales price in Seoul was 0.02%, which is higher than the previous week (0.01%). It is interpreted as a result of expectations for the new government policy in addition to the deregulation trend such as the abolition of the number of floors in Seoul.
Some observers also observe that stricter regulations may be introduced together to block such market instability. A method to advance the prohibition of the transfer of union membership from the current union establishment to the passing of a safety examination is highly discussed.
Jun-seok Koh, CEO of JEDU Investment Advisory, said, “Reconstruction regulations need to be eased to resolve the supply-demand imbalance, but short-term price increases are inevitable.
Reporter Jeong Soon-gu soon9@donga.com
Reporter Jeong Seo-young cero@donga.com
Correspondent Dongsoo Choi firefly@donga.com
