Controversy Over 'Price Assessment' of Solo Apartments Struggling with Mortgage Loans

[Asia Economy Reporter Yoo In-ho] Recently, Mr. A, who visited a commercial bank to purchase an apartment in Gangdong-gu, faced difficulties while consulting about a mortgage loan.

He was told, "It might be difficult to get a loan because the transaction price is unknown." This is because the apartment Mr. A intends to buy is a so-called 'Nahollo' complex with fewer than 100 households, where transactions are rare and accurate market prices are not available.

In the banking sector, 'KB Real Estate Market Price' and similar sources are mainly used to assess apartment market prices during mortgage loan processes, but for small-scale apartments, accurate market prices are often unavailable.

Amid a jeonse crisis that has driven real demand buyers into a buying frenzy, interest in Nahollo apartments, which are less popular than large apartment complexes, is increasing. However, it is pointed out that it is difficult to estimate market prices, making it hard to obtain mortgage loans from banks.

According to the industry on the 14th, with recent tightening of housing loan regulations and a buying frenzy centered on the metropolitan area, as the supply of large apartment complex units decreases, the number of real demand buyers seeking to purchase small-scale apartments is increasing.

This is because regulations are less strict than for large apartment complexes, and compared to multi-family or multiplex housing, the investment conditions and living environment are relatively better. Nahollo apartments refer to small apartments with one or two buildings or fewer than 100 households. Nahollo apartments were mainly built in the 1990s.

The problem is that because transactions are rare, it is difficult to accurately estimate the market price, which serves as the basis for loans.

According to the Enforcement Rules of the Banking Supervisory Regulations, during the mortgage loan process, apartment market prices can only be based on four criteria: National Tax Service standard prices, appraiser's appraisal value, Korea Appraisal Board prices, and KB Real Estate Market Price general transaction prices.

However, apartments with fewer than 100 households cannot apply the Korea Appraisal Board or KB Real Estate Market Price, making value estimation difficult. This is also why controversy arose over the official price of 653 million KRW for the 129㎡ mid-to-large apartment in Gangnam area (Bangbae-dong, Seocho-gu) owned by Land, Infrastructure and Transport Minister nominee Byeon Chang-heum.

In practice, banks can inquire about market prices from two real estate agencies near the apartment and calculate the loan amount by choosing a lower price considering the risk. However, since real estate agencies tend to set prices based on 'asking prices,' which may reduce accuracy, banks are effectively reluctant to provide loans.

Although it is possible to request an appraisal from a certified appraiser, banks rarely use this method due to the associated costs.

Experts point out that the method of estimating market prices for Nahollo apartments needs to be reconsidered. As the government promotes urban redevelopment and street housing maintenance projects to increase housing supply, to activate Nahollo apartment construction?which can be seen as de facto small-scale redevelopment and reconstruction?it is necessary to diversify market price estimation methods and ensure that banks do not disadvantage mortgage loans.

An expert said, "Although big data-based market price estimation methods have emerged, no banks apply them. If banks apply mortgage loans through rapid collateral value estimation, real demand buyers seeking Nahollo apartments will benefit."

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