Kyungsillyeon "LH, 1.2 Trillion Won Sales Profit from 62 Complexes in Gyeonggi"

The Citizens' Coalition for Redefinition urged the Korea Land and Housing Corporation (LH) to disclose the cost of sale.

Construction Cost of Apartments Sold in the Same Year: LH Hanam Gam-il 7.63 Million KRW vs SH Hang-dong 5.98 Million KRW

48 out of 62 Complexes, 77%, More Expensive than Legal (Basic) Construction Cost

Prevent Overpricing by Disclosing Sale Costs and Restore Public Nature of Public Housing

[Asia Economy Reporter Kim Min-young] A civic group has claimed that Korea Land and Housing Corporation (LH) earned profits amounting to 1.2 trillion KRW from apartment complex sales in Gyeonggi Province over the past decade.

The Citizens' Coalition for Economic Justice (CCEJ) held a press conference on the 16th at their auditorium in Jongno-gu, Seoul, announcing the estimated sale costs of 62 apartment complexes sold by LH in Gyeonggi Province since 2011. The land cost within the sale cost was calculated by adding financial expenses and taxes and public charges (10% of development cost) to the land development cost, and the construction cost was based on the basic construction cost.

According to the analysis, the average sale cost per pyeong (3.3㎡) increased by 1.81 million KRW from 8.72 million KRW in 2011 to 10.53 million KRW in 2021, while the sale price disclosed by LH rose by 3.47 million KRW from 8.74 million KRW to 12.21 million KRW during the same period. This means the sale price increased about twice as much as the sale cost. For all 62 complexes combined, the total sale price exceeded the total sale cost by an estimated 1.1876 trillion KRW.

CCEJ's estimated sale cost was similar to or lower than the sale price from 2011 to 2014 but became lower than the sale price starting in 2015. Accordingly, the sale profit (sale price minus sale cost), which was a loss of 25.7 billion KRW in 2014, increased to 317.4 billion KRW in 2021. CCEJ pointed out that the increase in sale profit was due to the Park Geun-hye administration's policy change in September 2015, which revised the land supply price standard from 90-110% of development cost to an appraisal price reflecting market value, thereby raising land costs.

CCEJ also claimed, "It is suspected that LH set higher construction costs as housing prices rose during the Moon Jae-in administration."

In fact, CCEJ's investigation revealed that construction costs for 48 out of 62 complexes, or 77%, were higher than the Ministry of Land, Infrastructure and Transport's announced basic construction cost. For example, the construction cost of LH's Seongnam Godeung S3 complex sold in 2019 was 7.96 million KRW, about 1.52 million KRW higher than the basic construction cost of 6.445 million KRW at that time. Complexes sold after the Moon Jae-in administration, such as Goyang Jichuk B1 (2021), Uijeongbu Gosan S3 (2020), and Hanam Gam-il B3 (2018), were all more than 1 million KRW higher than the basic construction cost.

CCEJ argued that LH's public housing sale price setting process is opaque. They pointed out, "Because cost disclosure is not made, it is difficult for consumers to properly monitor even if the government and LH inflate land and construction costs."

CCEJ further stated, "Local housing public corporations such as Seoul Housing and Communities Corporation (SH) and Gyeonggi Housing and Communities Corporation (GH) disclose sale costs, but LH, a central public corporation, refuses to disclose costs despite losing all related lawsuits." They urged, "Presidential candidates should present reform plans for public housing policies, including LH's sale cost disclosure, stopping excessive pre-sale pricing, and halting public land sales."

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