Controversy Over Disclosure of Sale Prices... SH Corporation "Stuck for 20 Years" vs LH Corporation "Must Consider Public Enterprise Characteristics"

'Disclosure of Sale Prices and Stability of Affordable Housing' Debate
10 AM on the 29th, Yeouido National Assembly Members' Office Building
Hosted by National Assembly Member Seo Beom-su of the People Power Party and SH Corporation

On the morning of the 29th, participants are taking a commemorative photo at the 'Disclosure of Sale Prices and Stability of Housing for the Common People' forum held in Seminar Room 2 of the National Assembly Members' Office Building in Yeouido, Seoul.
Photo by Beomsoo Seo, Office of National Assemblyman of the People Power Party

[Asia Economy Reporter Hwang Seoyul] SH Corporation and LH Corporation have taken sharply opposing stances regarding the disclosure of pre-sale cost prices. SH Corporation and the Citizens' Coalition for Economic Justice (CCEJ) urged LH Corporation to disclose its pre-sale costs in the interest of the public's right to know, but LH Corporation expressed a negative view, stating that it could face difficulties in continuing nationwide projects.

At the discussion forum titled "Disclosure of Pre-sale Costs and Stability of Housing for the Common People," held on the morning of the 29th at the 2nd Seminar Room of the National Assembly Members' Office Building in Yeouido, Seoul, Kim Heondong, President of Seoul Housing and Communities Corporation (hereafter SH Corporation), said, "We have held the same discussion more than 50 times over the past 20 years, but nothing has changed since then," adding, "Public enterprises must disclose the cost of pre-sale prices to resolve the issues of high apartment prices and real estate problems." President Kim has advocated for the disclosure of pre-sale costs since his time at the Citizens' Coalition for Economic Justice (CCEJ).

This criticism is directed at the Korea Land and Housing Corporation (hereafter LH Corporation), which, unlike SH Corporation that discloses pre-sale costs, has not disclosed pre-sale costs despite being a public enterprise. Currently, LH Corporation only discloses ten items of land development costs and the basic construction cost through the pre-sale price announcement system. In contrast, since Kim Heondong took office as SH Corporation president in November last year, he has declared his intention to actively implement the "disclosure of pre-sale costs," and has consecutively announced the pre-sale costs of five districts (Magok, Segok 2, Naegok, Ogeum, Hangdong) where project settlements were completed over the past ten years.

On the morning of the 29th, Kim Seong-dal, Policy Director of the Citizens' Coalition for Economic Justice, continued his remarks at the discussion on 'Disclosure of Sale Prices and Stability of Housing for the Common People.' Photo by Hwang Seoyul

In addition to Kim Heondong, President of SH Corporation, Kim Seongdal, Policy Director of the Citizens' Coalition for Economic Justice, criticized, "The public is concerned that there might be a bubble in LH Corporation's pre-sale prices," adding, "Since LH Corporation does not calculate pre-sale prices based on costs but raises pre-sale costs as house prices rise, this raises questions." According to CCEJ's investigation of the pre-sale prices of 62 complexes sold by LH Corporation in Gyeonggi Province since 2011, the prices were about 1.2 trillion KRW higher than the appropriate costs. Kim's argument implies that although LH Corporation experienced losses during 2011-2015 when house prices did not rise, it made profits as pre-sale prices increased alongside the significant rise in house prices during later periods.

On the other hand, Kang Osun, Director of Sales Planning at LH Corporation, rebutted that it is difficult to disclose pre-sale costs due to LH Corporation's status as a national public enterprise. Kang explained, "Unlike SH Corporation and GH Corporation, LH Corporation carries out nationwide pre-sale housing and rental housing projects," adding, "If costs are disclosed, in the metropolitan area where costs are lower than market prices, pre-sale prices would be set at cost level, and conversely, in provincial areas, pre-sale prices would be set below market prices." Kang expressed concern, saying, "This would make cross-subsidization and continuous nationwide project promotion difficult."

Furthermore, Kang cited social conflict, deterioration of housing quality, contraction of private housing construction, and the practical benefits of cost disclosure as reasons, stating, "If social discussions take place and institutional support is provided, we will consider disclosing costs."

Park Wongap, Senior Real Estate Specialist at KB Kookmin Bank WM Star Advisory Group, also expressed support for the principle of disclosing pre-sale costs but raised concerns. Park said, "From the perspective of public enterprises, pre-sale prices may be low, but how to secure funding for rental housing supply must be considered," and "Securing land is also important, and it needs to be supplemented whether it is possible to secure enough land in Seoul to expand citizens' opportunities for pre-sale."

Meanwhile, negative voices were raised regarding the expansion of pre-sale cost disclosure to the private sector. Kim Youngkwon, Head of the New Business Office at the Korea Construction Association, said, "Costs are trade secrets necessary for companies to maintain price competitiveness and survival," adding, "It could act as excessive regulation restricting corporate activities, such as exposing construction companies' trade secrets." Kim also pointed out, "Even with the same design documents, construction costs can vary depending on each company's strengths and infrastructure development, so simply comparing cost statements could confuse consumers."

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