"The Paradox of Price Controls"… General Sale Prices Cheaper than Association Members' Prices

[Image source=Yonhap News]

[Asia Economy Reporter Yuri Kim] The government's artificial control over sale prices is causing side effects in various places. During the general sale process of major redevelopment and reconstruction apartments, the Housing and Urban Guarantee Corporation (HUG), the sale price guarantee institution, unilaterally sets the sale prices without considering each complex's project duration, costs, and surrounding conditions, resulting in a reversal phenomenon where the general sale price is even lower than the price for union members. This is a paradox of sale price regulation.

According to the maintenance industry on the 29th, the Shinbanpo 3rd and Gyeongnam Apartment Reconstruction Union, which applied for a resident recruitment announcement at Seocho District Office the day before, was notified by HUG of an average general sale price of 48.91 million KRW per 3.3㎡. This is 6.69 million KRW cheaper compared to the union members' average sale price (55.6 million KRW). In fact, considering that the union members' sale price for the 59㎡ units, which make up the majority of the general sale volume, is 58 million KRW per 3.3㎡, the union explained that general buyers can purchase at a price about 220 million KRW cheaper than union members. Compared to the market prices of surrounding complexes such as Acro River Park, which exceed 100 million KRW per 3.3㎡, this is a difference of about 1.2 to 1.3 billion KRW. A union official said, "The 59㎡ units available for general sale include floors up to the 16th floor and are popular among buyers," adding, "The union requested that the general sale price be set at least at the same level as the union members' average sale price, but this was not accepted."

The general sale volume of this complex totals 224 units, including 197 units of 59㎡. Especially considering that the general sale price exceeds 900 million KRW, making it ineligible for interim payment loans and prohibiting resale of sale rights, the dominant analysis is that the general sale will be a feast for cash-rich buyers. The additional burden on union members will increase by the amount the general sale price is lowered due to the 'bargain sale.'

A union official emphasized, "48.91 million KRW is a level similar to the price at the time of the Seocho Woosung 1st sale three years ago." This result is due to the current HUG's high sale price review criteria. HUG reviews within 100% of the average and highest sale prices of projects sold within one year. Since sales in Seocho District have been conducted one by one with a few months' difference, the 100% standard was applied to most complexes sold during this period. This complex plans to leave the possibility of pre-sale open while also considering post-sale subject to the private land sale price ceiling system, and will consult with the government and others for two months.

Since last June, when the high sale price review criteria were strengthened, even if the sale date of the comparison sale complex exceeded one year, the price is reviewed not to exceed 105% of the average sale price, and the amount is compared with the average sale price adjusted by the housing price fluctuation rate, resulting in cases where the price is the same as several years ago. A maintenance project official said, "If the general sale price falls by 5-10% due to the implementation of the private land sale price ceiling system, the reversal phenomenon between union and general sale prices is likely to increase," adding, "There are concerns about market disruption due to excessive price regulation."

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