“Land Disappearance Encouraged”… Public Land Development Candidate Sites Attracting Speculative Demand

Urban Public Housing Candidate Area
Small Investors Engage in Ultra-Short-Term Transactions
Property Rights Infringement Controversy Persists

A panoramic view of the low-rise residential area around Hongje-dong, Seoul, selected as the government's 5th urban public housing complex district. (Photo by Ryu Taemin)

[Asia Economy Reporter Ryu Tae-min] "The ruling party and government have paved the way for people to buy houses even now." (Representative of A Real Estate Agency (licensed), Jeungsan-dong, Eunpyeong-gu, Seoul)

Concerns are rising that the credibility of the Seoul 2·4 Supply Plan is collapsing, as about 500 housing transactions aiming for occupancy rights have taken place within two weeks around the candidate sites for the core measure of the plan, the Urban Public Housing Complex Project (Public Housing Project).

On the 30th, the reason for the surge in short-term transactions at the public housing project candidate sites was the ruling party and government's change of the occupancy rights reference date. Originally set as the 'announcement date of the plan,' the reference date for granting occupancy rights within the candidate sites was changed to the 'amendment date of the Public Housing Special Act,' giving investors a two-week window. The Ministry of Land, Infrastructure and Transport's expectation that "even if the reference point is delayed to the plenary session approval date, considering the usual time taken from contract signing to registration completion, the influx of speculative forces will be limited" has proven completely wrong.

According to frontline real estate agencies on site, as the ruling party and government delayed the occupancy rights reference date, ultra-short-term transactions with contract deposit and final payment made within two weeks, instead of the usual one to two months, have been reported in major candidate sites. Most of these candidate sites are relatively cheaper compared to apartments, making it easier to raise funds, which is also cited as a reason for the surge in transactions. A representative of B Real Estate in Sipjeong-dong, Incheon, said, "Compared to Seoul, the share prices are relatively low, and the gap between jeonse (long-term deposit lease) and sale prices is not large, so many small investors expecting capital gains participated."

There are also reactions that the ruling party and government's reversal of their original stance and change of the occupancy rights reference date after already publicly disclosing the candidate sites was a mistake. An industry insider pointed out, "It's no different from announcing public land candidate sites in advance and telling people to buy land," adding, "As a result, it encouraged investors to purchase."

Controversy over property rights infringement still remains. If a property is acquired after the approval date in an area selected as a project candidate site, it is still subject to cash compensation. Therefore, issues of fairness between those who are exempted from cash compensation due to this amendment and subsequent buyers are being raised.

Professor Kwon Dae-jung of Myongji University’s Department of Real Estate said, "Granting priority supply rights only to transactions on a specific date despite the same conditions of region and sale target is a decision that violates fairness," and added, "Consistency in the criteria for granting priority supply rights is necessary to resolve the controversy."

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