Controversy Over Special Housing Allocation for 'Lotto' Sejong City Officials... 1 in 4 Houses in 10 Years

[Image source=Yonhap News]

[Asia Economy Reporter Jo Gang-wook] Controversy is growing as Sejong City, which recorded the highest nationwide housing price increase rate last year, has been revealed to have been used as a speculative tool by public officials. Over the past 10 years, one out of every four apartments supplied in Sejong was allocated to government officials.

According to the real estate industry and government on the 22nd, since the special supply system for the Administrative City of Sejong was established in 2010, out of 96,746 apartments supplied in Sejong over the past decade, 25,636 units (26.4%) were taken by public officials and employees of relocated institutions. This means that more than one in four apartments were sold through special supply.

This system prioritizes half of the newly supplied apartments to public officials and employees of relocated institutions. Acquisition tax imposed when moving into the apartment is also reduced. It was designed to provide housing environments to employees of relocated institutions to encourage early settlement.

At the time the system was created, Sejong was a barren land, so the former Happy City Agency operated the system loosely by granting special supply qualifications not only to institutions officially relocated to Sejong but also to employees of institutions that purchased land in Sejong for relocation. The government also actively encouraged special supply applications by providing tax benefits such as acquisition tax reductions.

However, Sejong's housing prices have skyrocketed since last year, raising concerns. In July last year alone, the weekly increase rate approached 3%, and several apartment complexes in Sejong saw prices more than double within the year.

As a result, Sejong achieved records such as 'No. 1 in housing price increase rate in 2020 (42%)' and 'No. 1 in official price increase rate.' In fact, last year, 19 multi-homeowner public officials sold their special supply apartments in Sejong, earning an average profit of about 400 million KRW.

The bigger problem is that some public officials have abused this system. Many officials either sold or rented out apartments obtained through special supply and commuted from Seoul by shuttle bus, turning Sejong special supply apartments into financial investment tools.

After the Korea Land and Housing Corporation (LH) land speculation scandal broke out, it was revealed that LH employees received special supply apartments not only in Jinju, where the headquarters is located, but also in Sejong.

The Korea Customs Service's Customs Valuation and Classification Institute received special supply apartments in Sejong despite not qualifying, after building an office building in Sejong without relocating there. Korea Electric Power Corporation reportedly received special supply apartments because they worked in Jochiwon (old downtown) in Sejong and built an integrated office building within Sejong City.

Employees of the Happy City Agency, responsible for Sejong's construction, and their families also purchased land near the Sejong Smart National Industrial Complex.

Some argue that this incident should be an opportunity to eliminate preferential treatment for Sejong. Especially in real estate communities, there are calls to completely abolish the special supply system for apartments in Sejong.

Meanwhile, apartment prices in Sejong fell this week for the first time in 81 weeks. According to the weekly apartment price trend by the Korea Real Estate Board, the weekly apartment sales price increase rate in Sejong was -0.1%, turning negative for the first time since the fourth week of October 2019.

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