Apartment Price Ceiling System 'Basic Construction Cost' Jumps 3.42% in Two Months

Apartment buildings in Seoul city [Image source=Yonhap News]

The standard construction cost used to calculate the sale price of apartments subject to the price ceiling system will increase by 3.42% after two months.

The Ministry of Land, Infrastructure and Transport announced on the 14th that it will notify the new standard construction cost, reflecting price changes in construction materials and labor costs, effective from the 15th.

The standard construction cost is usually announced twice a year on March 1 and September 15, but this year it was announced once more in July to reflect the sharp rise in rebar prices.

In this regular announcement, excluding the increase in rebar prices, factors such as labor cost increases were reflected, raising the cost by 3.42% compared to July. The upper limit of construction cost per supply area will be adjusted from 6,649,000 KRW to 6,879,000 KRW.

The September standard construction cost is 5.25% higher than that of March. This is the highest increase rate since the standard construction cost was first announced in 2007.

Looking at the increase in detail, the rise in indirect construction costs due to changes in the rate used by the Public Procurement Service for calculating indirect labor costs accounted for 2.09 percentage points, while the increase in direct construction costs due to labor and major construction material price changes accounted for 1.10 percentage points, indicating that the increase in indirect labor costs was significant.

The revised announcement will apply to those who apply for resident recruitment approval after the 15th. The standard construction cost is applied when calculating the sale price of housing subject to the price ceiling system.

The Ministry of Land explained, "Since the actual sale price is determined comprehensively considering factors such as sale feasibility and surrounding market prices, the impact on the actual sale price is expected to be lower than the increase in the standard construction cost."

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