Base Construction Cost Rises 2.53%... Increased Pressure on Sale Price Hike ↑

Reflection of Price Changes in Construction Materials and Labor Costs

Photo by Asia Economy

The standard construction cost used to calculate the sale price of multi-family housing subject to the price ceiling system will increase by 2.53% starting from the 15th.

On the 14th, the Ministry of Land, Infrastructure and Transport announced that, considering price fluctuations in construction materials and labor costs since the notification in July, the standard construction cost will be announced on the 15th.

With this announcement, the standard construction cost will rise by 2.53% from September 15. Accordingly, the cost per square meter will be adjusted from 1,857,000 KRW to 1,904,000 KRW.

The Ministry regularly adjusts the standard construction cost every six months (March 1 and September 15 annually) reflecting factors affecting construction costs, and also operates a system for irregular adjustments when major construction material prices surge.

In July, additional criteria for irregular adjustments were established to more promptly reflect the sharp rise in material prices in the construction cost.

Following the March notification, the price increases of high-strength rebar (10.8%) and ready-mixed concrete (10.1%) were reflected, resulting in a 1.53% increase in the standard construction cost on July 15.

This announcement reflects changes in material prices and labor costs other than the previously pre-reflected high-strength rebar and ready-mixed concrete from the July notification, adjusting the standard construction cost upward by 2.53% compared to the previous notification (July 2022).

The revised notification will apply to those applying for approval to recruit residents from September 15, 2022 onward.

The standard construction cost is applied when calculating the sale price of housing subject to the price ceiling system (land cost + land cost surcharge + standard construction cost + construction surcharge).

However, the entire increase will not be directly added to the sale price.

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

The Ministry also stated, "We plan to reasonably adjust the standard construction cost reflecting fluctuations in construction material prices to ensure the supply of high-quality apartments applying the latest technologies and materials."

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