Remedying the price ceiling system that distorts the market… Dunchon Jugong 84㎡ Increase by 25 million won

The market’s reaction to the effect of the government’s reform of the presale price cap system is mixed. It is positive that the cost incurred from the maintenance project and the sharp increase in raw material prices were reflected, but the improvement plan for calculating the housing land cost, which accounts for the largest portion of the sale price, was omitted. It is divided into an evaluation that ‘the construction cost of the construction company and the maintenance association has opened up’ and an analysis that ‘it is difficult to become a driving force for the maintenance project due to the lack of a plan to reflect the housing land cost’. It is pointed out that the government, which originally promised to reform the price ceiling system, may have come up with a ‘half improvement plan’ for fear of stimulating house prices.

○’Reorganization of half of the housing land cost reform plan missing’

The Ministry of Land, Infrastructure and Transport announced on the 21st that when calculating the sale price of a private maintenance project subject to the sale price ceiling system, tenant relocation costs, operating loss compensation costs, name litigation costs, financial costs for relocating existing residents, and general assembly operating costs are also reflected in the general sale price.

In the future, household relocation expenses will be reflected in four months’ household expenses for tenants (normally 21 million won for four people) and two months’ household expenses per household for those subject to cash settlement. Compensation for operating loss reflects 4 months’ worth of business closure and 2 years’ worth of business closure. It was decided that the interest on the moving expenses loan reflects the interest actually accrued, but sets an upper limit for operation.

In addition, the basic construction cost applied to apartments subject to the pre-sale price ceiling system will be changed so that it can be flexibly adjusted to changes in material prices. Reorganized the 4 items currently selected as major materials (ready concrete, reinforcing bars, PHC (high-strength concrete) piles, and copper pipes) into 5 items (ready concrete, reinforcing bars, window glass, tempered plywood flooring, aluminum formwork) in consideration of changes in construction methods and frequency of use. do. In addition, the private real estate cost calculation method, which has been privately verified by the Korea Real Estate Agency, is verified by establishing a housing site cost verification committee in which external experts also participate. The purpose is to increase the objectivity and fairness of the verification of housing land cost. The revised upper price limit system will be applied to businesses that have not yet received a notice for occupant recruitment at this time. An official from the Ministry of Land, Infrastructure and Transport said, “The sale price ceiling system has contributed to the affordable supply of new homes, but there were many requests for improvement because the essential cost of the maintenance project could not be reflected in the sale price.”

○Price 884 million square meters, 25 million won increase effect

According to the simulation results commissioned by the Ministry of Land, Infrastructure and Transport to the Korea Real Estate Agency, the sale price is expected to increase by 1.5 to 4.0% due to the improvement of this system. It is estimated that the sale price of the redevelopment site A in Seoul will increase by about 2.3% (550,000 won per 3.3㎡) due to this system improvement. The current sale price of Plant A is about 25.8 million won per 3.3 square meters. As a result of this system improvement, the cost of litigation (90,000 won), moving expenses (380,000 won), general assembly expenses (40,000 won), etc. are added, and the basic construction cost increase (90,000 won) is added, the pre-sale price will be about 26.4 million won per 3.3㎡. was analyzed to rise. The general sale price of Jugong Apartments in Dunchon, Gangdong-gu, Seoul, which currently stands at 37 million won per 3.3 square meters, is expected to rise by about 740,000 won due to system improvements (assuming the government’s average increase of 2%). Based on the exclusive 84 m2, the sale price will increase by 25 million won.

Experts point out that some business sites that cause friction due to construction costs will be able to breathe, but it will not be enough to become a catalyst for delayed maintenance projects. Considering the recent rise in raw material prices and the rise in consumer prices, which has risen to the 5% range, it means that the effect of expanding supply is not likely to be significant at a presale price increase of up to 4%. Lee Eun-hyeong, a research fellow at the Korea Construction Policy Research Institute, said, “If we leave the housing cost, which accounts for about 70% of the sale price, and fine-tune only the small additional cost, it will be difficult for the housing supply entities to move actively. It is not to the extent that it will become a big driving force for the revitalization of the maintenance business right now,” he said.

However, the general observation is that it will be difficult to win the lottery like a ‘half-price apartment’ after the system is improved.

Correspondent Kim Eun-jung/Lee Hye-in kej@hankyung.com

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