Dunchon Jugong Association Members Launch 'Complaint Bomb' Over HUG's General Sale Prices

Association Sets General Sale Price at 35.5 Million KRW per 3.3㎡
HUG Expected to Set Price Below 30 Million KRW per 3.3㎡ Following High Price Control Standards
Association: "Same Official Land Price as Songpa-gu Olympic Athletes' Village, Uniform Standards Not Appropriate"
Some Criticize as Excessive Market Interference Ignoring Special Circumstances
Price Ceiling System to Be Implemented in April... Prolonged Tug-of-War Not Sustainable

On the 13th, demolition work for reconstruction is in full swing at Dunchon Jugong Apartment in Gangdong-gu, Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Onyu Lim] Reconstruction association members of Dunchon Jugong Apartment in Gangdong-gu, Seoul, are filing dozens of complaints daily to the Housing and Urban Guarantee Corporation (HUG), urging the calculation of a 'reasonable general sale price.' This comes as the general sale is being rushed ahead of the implementation of the price ceiling system in April, amid reports of a significant gap between the association and HUG regarding the general sale price.

According to HUG's official website on the 9th, from the 1st to the 8th of this month, reconstruction association members of Dunchon Jugong Apartment filed a total of about 120 complaints over eight days. The main content of the complaints is that HUG should calculate the general sale price reasonably.

One association member stated, "Dunchon Jugong is in Gangdong-gu, but its official land price is the same as that of the Olympic Athletes' Village Apartment in Songpa-gu, which is just a one-minute walk away," adding, "It makes no sense to calculate the general sale price based on the average price of apartments in Gangdong-gu." He continued, "Association members are not speculators," emphasizing, "The general sale price should not be set excessively low, causing association members to face additional financial burdens."

The reason Dunchon Jugong association members have launched this 'complaint barrage' is due to HUG's high-price management standards implemented to curb excessive housing price increases. Previously, the association set the general sale price at 35.5 million KRW per 3.3㎡ through a general meeting of members. However, it is known that HUG is likely to decide the general sale price at around 26 million to 30 million KRW. According to the high-price management standards, the general sale price of new apartments is set based on the sale prices of nearby apartments in the same area.

HUG stipulates that the average sale price must not exceed the highest sale price of nearby apartments sold within one year. For example, the Hildesheim Olympic Park in Seongnae-dong, Gangdong-gu, sold in October last year, was priced at 29.86 million KRW. If the comparison target is expanded to apartments sold more than a year ago, the price cannot exceed either '105% of the average sale price' or 'the average sale price adjusted by the housing price fluctuation rate,' whichever is lower. The general sale price of Godeok Xi in Sangil-dong, Gangdong-gu, sold in September 2018, was 24.45 million KRW per 3.3㎡; applying 105% results in about 26 million KRW per 3.3㎡. In any case, this does not reach the association's target general sale price of 35.5 million KRW.

Therefore, association members are demanding the calculation of the general sale price considering the area's special characteristics, such as proximity to Songpa-gu and high official land prices. A HUG official explained, "We cannot say whether the market's expected general sale price is right or wrong," but added, "Unless there are special circumstances, the standard for setting the general sale price will be apartments within the same district, that is, Gangdong-gu."

There are also perspectives anticipating a change in HUG's stance. There have been continuous criticisms that unilaterally calculating the general sale price without considering regional characteristics is an excessive market intrusion. At the National Assembly audit of HUG in October last year, President Jaegwang Lee responded regarding the Dunchon Jugong general sale price, saying, "We will review it diligently and make improvements where necessary." Since Dunchon Jugong is a large complex (12,000 households) considered the largest reconstruction since the founding of Korea, a delay in sales could also put HUG in a difficult position.

Prolonged negotiation periods with HUG are disadvantageous for the association as well. If sales are not completed by the end of April, the price ceiling system will apply, potentially lowering the general sale price further. Therefore, the association cannot indefinitely engage in a tug-of-war over the general sale price. Some association members are arguing that post-sale, which does not require HUG's sales guarantee, should be considered.

This content was produced with the assistance of AI translation services.