HUG Fully Reforms 'High Pre-sale Price Review System'... 90% Cap on Surrounding Market Prices

Set Upper Limit at 85~90% of Surrounding Market Prices
Reflecting Sale and Housing Market Conditions for Increased Rationality
Review Criteria Disclosed... Ending Opaque Controversy

(Photo by HUG)

[Asia Economy Reporter Moon Jiwon] The Housing and Urban Guarantee Corporation (HUG)'s high-priced housing review system, which had been criticized for 'opaque evaluations' and 'excessive price controls,' will be completely revamped.

HUG plans to establish reasonable standards to ensure that sale prices do not excessively deviate from the prices of surrounding apartments, and will transparently disclose the previously undisclosed review criteria.

On the 9th, HUG announced that it plans to fully revise the 'High-priced Housing Review Regulations and Enforcement Rules' considering policy and market environment changes as well as industry requests.

First, HUG will set a risk management standard for price fluctuations by considering a certain percentage (85-90%) of the surrounding market prices as the upper limit during high-priced housing reviews.

Additionally, by selecting two comparison projects?one from the sale projects and one from the completed projects?HUG will reflect both the sales market and the existing housing market situations to calculate sale prices more reasonably.

In particular, for areas where new sales are rare and surrounding market prices are low, the review of sale prices will allow some adjustments considering the local sale price levels. This is expected to enhance the supply incentives for developers.

Until now, when selecting comparison projects, HUG evaluated them in three stages: location, complex size, and brand, and selected comparison projects that were similar to the guaranteed application projects in two or more categories.

However, going forward, the evaluation criteria will be changed to location, complex characteristics, and project stability, and surrounding projects will be scored on each category, with the sale and completed projects having the smallest total score difference selected as comparison projects.

When adjusting sale prices for projects superior or inferior to comparison projects, adjustments will be made quantitatively according to the score difference to minimize concerns about arbitrariness in the review.

Furthermore, HUG will break away from the previous practice of only disclosing rough review guidelines and will disclose the review criteria going forward. The disclosure of review criteria is expected to increase predictability of high-priced housing review amounts.

Previously, HUG's branch offices conducted high-priced housing reviews, but in the future, branches will be responsible for consultations with housing developers, and a dedicated organization will be established at HUG headquarters to handle reviews.

HUG's high-priced housing review applies when issuing sale guarantees in high-priced housing management areas. The revised high-priced housing review regulations will be implemented from the 22nd of this month after a grace period.

Lee Jaegwang, President of HUG, said, "This system improvement is a measure to stably manage HUG's sale guarantee risks while adjusting sale prices to a more reasonable level," adding, "It is expected to strengthen the foundation for revitalizing private housing supply."

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