[6·21 Real Estate Measures] Revision of the Sale Price Ceiling System, "Efforts to Balance Between Rising House Prices and Realistic Sale Prices"

On the 17th, a view of apartments from Lotte World Tower Seoul Sky in Songpa-gu, Seoul. The Korea Real Estate Board announced that the actual transaction price index for apartment sales in Seoul in March was 175.1, up 1.4 points from the previous month (173.7). This marks the first time in five months since recording 180.0 in October last year that the Seoul apartment sales actual transaction price index has turned upward again. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Hwang Seoyul] Experts have evaluated the revised plan for the price ceiling on pre-sale prices as "an effort to find a balance between inflation burdens and the realization of pre-sale prices."

The core content of the revised plan for the price ceiling on pre-sale prices announced on the 21st is to reflect necessary expenses such as financial costs for relocation expenses arising from redevelopment projects, residential relocation costs, compensation for business losses of commercial tenants, and general meeting operation costs in the pre-sale price.

Also, the basic construction cost, which is uniformly applied to apartments under the price ceiling on pre-sale prices, can be adjusted irregularly in addition to the regular notifications in February and September. The adjustment items have also been made more realistic, shortening the cycle to reflect the increase in material prices in construction costs.

With this revision, the government expects that the increase rate of pre-sale prices for apartments subject to the price ceiling will vary depending on conditions but will be up to about 4%.

Experts analyzed that the revision was an effort to balance public opinion on rising housing prices and the realization of pre-sale prices. Eunhyung Lee, a research fellow at the Korea Construction Policy Institute, said, "If pre-sale prices are raised significantly immediately, the rise in new apartment prices could affect real estate prices, so mentioning a maximum increase rate of about 4% seems to keep this in mind."

However, the construction industry appears disappointed with the lower-than-expected increase rate. The construction industry responded, "Although the increase in general pre-sale prices will somewhat reduce the business burden of redevelopment project associations, the profitability will only improve slightly."

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