SH Corporation "Urgent Need to Improve System for Mandatory Post-Construction Sales for Public Housing Developers"

The post-construction sale system, which recruits residents after 90% of the construction process is completed, has recently been claimed to be effective in preventing poor construction practices such as the collapse of underground parking lots and the omission of rebar in apartments.

Cheon Seong-hee, Director of SH Urban Research Institute (from left), Song Du-han, Director of GH Urban Housing Research Institute, Kim Seong-dal, Secretary General of the Citizens' Coalition for Economic Justice, Kim Hyun-soo, Professor at Dankook University, Kim Heon-dong, President of SH Corporation, Ha Tae-kyung, Member of the National Assembly (People Power Party), Kim Byung-joo, Member of the National Assembly (Democratic Party), Yang Ki-geun, President of the Korean Local Administration Association, Oh Jeong-seok, Senior Researcher at SH Urban Research Institute, Yoon Se-hyung, Director of IH Future City Research Institute, and Kim Kwang-rim, Director of Public Housing Policy Division at the Ministry of Land, Infrastructure and Transport, are posing for a commemorative photo at the forum on the 30th.
[Photo by SH Corporation]

According to the Seoul Housing and Communities Corporation (SH Corporation) on the 30th, this was mentioned at the "Policy Forum for the Activation of the Post-Construction Sale System," hosted by the offices of Assemblymen Ha Tae-kyung and Kim Byung-joo, and organized by SH Corporation and the Korean Local Administration Association.

Post-construction sale is a system where sales occur after a certain period of construction progress (usually 60-80% of the construction process). Since September 2006, when Seoul Mayor Oh Se-hoon announced the policy of implementing post-construction sales at 80% completion, SH Corporation has been the only housing public enterprise to sell all its housing units (a total of 87,416 units) through post-construction sales.

Oh Jung-seok, Senior Researcher at SH Urban Research Institute, explained in his presentation on "The Public Role in Activating the Post-Construction Sale System," “In pre-sale, when poor construction occurs, buyers suffer inconveniences such as delayed move-in due to reconstruction or having their paid sales funds tied up,” adding, “It is a structure where buyers inevitably suffer when accidents like the collapse of apartments in Geomdan occur.”

He continued, “On the other hand, in the post-construction sale system, the developer and construction company bear all costs related to delayed investment recovery due to supply delays, additional payments such as delay compensation or interest, and reconstruction costs,” and argued, “This can induce voluntary safety and quality management by the construction company, and consumers can prevent the risk of poor construction and related anxiety. The post-construction sale system is a fundamental alternative to prevent accidents like the one in Geomdan, Incheon.”

Professor Kim Seon-joo of Kyonggi University, presenting on "Expert Perceptions of the Post-Construction Sale System," said, “The post-construction sale system contributes to improving housing quality and forming a housing market centered on actual demand,” but noted, “There are persistent issues such as supply reduction, potential housing price increases, and increased financial burdens on construction companies, especially the difficulty for small and medium-sized construction companies to raise large-scale funds, which can negatively affect housing supply.”

Regarding this, he added, “The public sector should first implement the post-construction sale system to set an example for institutional stabilization,” and “Moreover, if the government strengthens financial and policy support, the financial structure of construction companies will be reinforced, leading the housing market toward a more stable and sustainable direction.”

In the subsequent discussion, Cheon Sung-hee, Director of SH Urban Research Institute, said, “SH Corporation introduced the post-construction sale system in 2006 and has supplied about 90,000 units through post-construction sales to date,” adding, “As a result, no structural poor construction has occurred, and safety inspections of apartment flat slabs have shown no abnormalities.”

Song Doo-han, Director of the Urban Housing Research Institute at Gyeonggi Housing and Urban Corporation (GH), pointed out, “The post-construction sale system can only be activated if supported by financial and guarantee systems,” and “It is difficult to succeed under the current financial system suitable for the pre-sale market.”

Yoon Se-hyung, Director of the Future City Research Institute at Incheon Housing Corporation (IH), emphasized, “Introducing the post-construction sale system alone does not solve all current problems, so a comprehensive approach considering housing supply volume for real estate price stabilization, project cost risks due to financial market variables, and innovation in the construction industry ecosystem to maintain housing quality is necessary.”

Kim Sung-dal, Secretary-General of the Citizens' Coalition for Economic Justice, criticized, “Even though local public enterprises such as SH Corporation and GH Corporation implement the post-construction sale system, the fact that the central public enterprise LH Corporation does not implement it shows a lack of will to stabilize housing for ordinary citizens and to solve the problems of speculation and poor construction in the pre-sale system.”

He added, “The implementation of the post-construction sale system should no longer be delayed, and the Ministry of Land, Infrastructure and Transport should immediately instruct LH Corporation to implement the post-construction sale system, while the National Assembly should improve the system to ensure mandatory post-construction sales in the private housing market.”

Professor Kim Hyun-soo of Dankook University, who chaired the session, summarized, “In general trading markets, the principle is to purchase products after seeing the actual item, and in the housing market, laws and systems should be established to ensure this principle is upheld through the introduction of the post-construction sale system.”

Kim Heon-dong, President of SH Corporation, stated, “To restore public trust shaken by recent poor construction incidents such as apartment exterior walls and underground parking lot collapses, public housing developers must first adopt the post-construction sale system.”

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