Apartment Sale Prices Rise... Basic Construction Cost Increased by Additional 1.53%

Essential costs such as residential relocation expenses are reflected in the sale prices of apartments subject to the price ceiling system, and the official notice of the basic construction cost, which serves as the standard for calculating sale prices, is also updated periodically. The basic construction cost will be further increased by 1.53%, from 1,829,000 KRW per square meter in March to 1,857,000 KRW per square meter starting today.

The Ministry of Land, Infrastructure and Transport announced on this day that the revised "Regulations on the Calculation of Sale Prices for Multi-family Housing" and "Standards for Calculating Essential Costs in Maintenance Projects" will take effect from the 15th, incorporating these changes.

According to the new regulations and standards, additional essential costs that were previously not reflected will now be included in the sale prices of apartments in maintenance projects such as reconstruction and redevelopment subject to the price ceiling system.

Costs such as residential relocation expenses, moving expenses, compensation for business losses, litigation costs for eviction, financing costs for relocation loans (interest), and general meeting operation expenses are recognized as essential expenses and will be additionally reflected in the land cost surcharge applied to land other than public land. Specific cost calculation standards have been established by the Ministry of Land, Infrastructure and Transport's official notice.

The method and conditions for calculating the basic construction cost, which serves as the standard for sale price calculation, have also been relaxed starting today.

Previously, the basic construction cost was officially announced regularly every March and September. Although it was possible to adjust the cost if the price of major materials such as cement rose by more than 15% within three months after the regular announcement, there were criticisms that this system had limitations in reflecting rapid market price increases.

From today, to ensure timely reflection of material cost surges in sale prices, PHC piles and copper pipes have been removed from the four material items currently used as the basis for irregular adjustments. Instead, three materials with a large share in the basic construction cost?window glass, engineered wood flooring, and aluminum formwork?have been added, making a total of five materials including ready-mixed concrete and reinforcing steel bars as the new standard.

Furthermore, in addition to the condition of a "single item rising by 15%," adjustments to the basic construction cost can now be made within three months after the regular announcement if the combined price increase rate of the top two materials by share (ready-mixed concrete and reinforcing steel bars) is 15% or more, or if the combined price increase rate of the bottom three materials (window glass, engineered wood flooring, aluminum formwork) is 30% or more.

Reflecting these new conditions, the Ministry of Land, Infrastructure and Transport adjusted the basic construction cost upward by 1.53% compared to the previous announcement in March, considering the 10.1% increase in ready-mixed concrete prices and the 10.8% increase in high-strength reinforcing steel bar prices since March.

Accordingly, the basic construction cost for above-ground floors per square meter (for floors 16 to 25 and exclusive area over 60㎡ up to 85㎡) has been raised from 1,829,000 KRW to 1,857,000 KRW.

An official from the Ministry stated, "The measures to reflect essential costs in the sale prices of apartments under the price ceiling system and to additionally increase the basic construction cost will apply to projects announcing resident recruitment starting today."

Meanwhile, improvements announced on the 21st of last month as part of the "Rationalization Plan for Sale Price System Operation," including the introduction of a "material cost surcharge system" during high sale price reviews by the Housing and Urban Guarantee Corporation (HUG), rationalization of criteria for selecting nearby projects (from projects completed within 20 years to those within 10 years), disclosure of detailed evaluation criteria and scoring for comparison projects, and establishment of an objection procedure, have already been implemented through amendments to HUG's internal regulations and have been in effect since July 1.

Additionally, major error cases related to appraisal for private land under the price ceiling system, appraisal guidelines, and detailed verification standards by the Korea Real Estate Board were distributed in early July after gathering various opinions from appraisal associations and others.

The Korea Real Estate Board's Land Cost Verification Committee, established to objectify the verification of private land costs, will be formed in July with recommendations from appraisal associations and others. After revising internal regulations for the committee's formation, the new system will apply to cases newly requesting appropriateness reviews of land costs.

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