Extension of Pre-sale Price Ceiling Suspension, Few Additional Benefit Complexes

[Asia Economy Reporter Inho Yoo] The Ministry of Land, Infrastructure and Transport has decided to further extend the application period of the private land price ceiling system for maintenance projects due to concerns over the spread of the novel coronavirus infection (COVID-19), giving redevelopment and reconstruction associations more time.

According to the industry on the 18th, maintenance project complexes such as Dunchon Jugong in Gangdong-gu and Gaepo Jugong 1st Complex in Gaepo-dong, which have been struggling with price negotiations with the Housing and Urban Guarantee Corporation (HUG), will benefit from this postponement measure. Since the government’s original plan required submitting the resident recruitment announcement by April 28 to avoid the price ceiling system, these redevelopment and reconstruction associations have been proceeding with their projects accordingly.

However, concerns about the spread of COVID-19 arose as large-scale general meetings of association members were scheduled to be held consecutively before the implementation of the price ceiling system, leading to calls for an extension of the system’s grace period. This is because holding a general meeting of association members is essential to obtain approval for the management disposition plan by getting price approval before applying for the resident recruitment announcement. Accordingly, local governments such as Gangdong-gu, Gangnam-gu, Eunpyeong-gu, and Dongjak-gu formally requested the Ministry of Land, Infrastructure and Transport to extend the grace period for the price ceiling system.

However, the Ministry of Land, Infrastructure and Transport believes that even if the grace period is extended by up to three months until the end of July, there will be almost no additional beneficiaries. Since general sale prices can be controlled through HUG’s sales guarantee, the ministry judged that the impact on the market would not be significant and thus implemented this postponement measure.

In fact, there are as many as 11 maintenance project sites, including reconstruction and redevelopment, that are likely to submit resident recruitment announcements by April 28. These include Dunchon Jugong in Gangdong-gu, which is negotiating general sale prices with HUG, as well as Gaepo Jugong 1st Complex in Gaepo-dong, Gangnam-gu, Sinbanpo 13th Complex in Jamwon-dong, Seocho-gu, and Heukseok 3 District in Heukseok-dong, Dongjak-gu. Other complexes in Seoul that had planned to hold general meetings this month have also been able to breathe a sigh of relief.

An industry official said, “Apart from the complexes that were already trying to avoid the existing price ceiling system, there are almost no new complexes expected to benefit, so the impact on the market will not be significant,” adding, “Since COVID-19 has not subsided, there is a possibility that the grace period extension may be further prolonged, so we need to monitor the situation more closely.”

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