Restricting Transfer of Reconstruction Association Members Early Causes 'Balloon Effect' in Initial Zones

Rising Prices and Fewer Listings in Complexes Allowing Member Status Succession
Residents of Complexes Facing New Regulations Protest

Apartment complex view in the Nowon-gu area of Seoul

[Asia Economy Reporter Onyu Lim] As the government and Seoul City decide to advance the timing of restrictions on the transfer of reconstruction association member status, buying demand is pouring into complexes in the early stages of reconstruction projects. This has caused a balloon effect where the number of old apartment listings just before passing the detailed safety inspection is decreasing and asking prices are soaring. On the other hand, in complexes that have passed the safety inspection but where project progress is slow, dissatisfaction over property rights infringement is growing.

According to the real estate industry on the 14th, in the case of Jugong Complex 17 in Chang-dong, Dobong-gu, Seoul, the number of listings has dropped sharply from 39 a month ago to 15 currently, a decrease of 24 listings (61.5%). This sharp decline followed the preliminary safety inspection pass on the 8th and the announcement the next day of the change in the timing of restrictions on the transfer of association member status. A representative from Chang-dong A Real Estate Agency (licensed) said, "After Mayor Oh Se-hoon's announcement, inquiries from buyers surged, causing even listings in not-so-good condition to rise in price." The 36.16㎡ (exclusive area) apartment was last month sold at a maximum of 500 million KRW, but the current asking price has soared to as high as 600 million KRW.

A similar trend is clearly seen in Nowon-gu, where early reconstruction complexes are concentrated. The 41.3㎡ unit in Jugong Complex 9 in Sanggye-dong, which passed the preliminary safety inspection at the end of last month, was traded at a record high of 535 million KRW on the 13th of last month, but the current asking price ranges from 570 million to 610 million KRW. The same applies to Jugong Complex 14 in Sanggye-dong, which is awaiting the preliminary safety inspection results. The 41.3㎡ unit traded at 565 million KRW on the 26th of last month now has an asking price of 600 million to 620 million KRW.

The reason why buying demand is strengthening for early reconstruction complexes at the stage just before passing the safety inspection is that on the 9th, the Ministry of Land, Infrastructure and Transport and Seoul City decided to change the timing of restrictions on the transfer of association member status from after the approval of association establishment (based on speculative overheated districts) to after passing the safety inspection, in order to block speculative demand in reconstruction.

On the other hand, in complexes that have passed the safety inspection and are newly subject to the regulations due to the change in timing of restrictions on the transfer of association member status, resident opposition is fierce. Eunma in Daechi-dong, Gangnam-gu, Seoul, is a representative example. Although this complex passed the safety inspection in 2010, 11 years have passed and the association has not even been established yet, raising concerns about infringement of property rights. A representative from Daechi-dong B Real Estate said, "We don't know how fast Seoul City will speed up reconstruction, but what if someone needs to sell their house due to circumstances?" and added, "Residents are strongly opposed because their freedom to buy and sell for over 10 years is being infringed."

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