[Initial Insight] The Anticipated 'New Apartment Defect War' Resolution Methods

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'A newly built apartment worth 1.7 billion KRW without even a toilet installed, buyers refuse to move in' 'Deliberately lowered stair heights... Daegu apartment construction defects controversy' These are real estate headlines appearing almost daily these days. "Construction companies completing apartments this year will have a serious headache. Defect controversies will be more persistent than ever," warned an employee of a major construction company I met last January, and his ominous prediction was not wrong.

He explained that the 'new apartment defect war' had already been anticipated for two years. To build apartments properly, construction companies need to allocate sufficient construction periods, but they failed to do so. In 2022, the ready-mixed concrete (remicon) strike, equipment usage demand rallies, and the Cargo Truckers Solidarity Union's collective transport refusal brought construction sites to a halt. Construction periods were delayed by several months in some cases. If the promised deadline is missed, the construction companies are liable for compensation. Pressured by time, construction companies had no choice but to rush work at the last minute. This explains why concrete work was done on rainy days and finishing work was not properly completed.

The soaring sale prices have also fueled the defect disputes. Last month, the sale price in Seoul was 11.7 million KRW per square meter, a 24% increase compared to a year ago. No one is tolerant of defects when buying the most expensive property of their lifetime with money borrowed that is hard to repay even over a lifetime. Before the time comes to pay for repairs out of their own pocket, buyers’ psychology is to find even one more defect. Recently, defect inspection agencies charging 10,000 KRW per pyeong (3.3 square meters) have become popular. Their task is to check with thermal cameras whether insulation materials are properly installed and measure every corner of the house with tape measures to detect errors as small as 0.1 mm. Unless sale prices drop sharply, defect issues in newly built apartments are likely to continue.

Therefore, the focus of the problem should be on reducing defects in newly built apartments. Institutionally, the introduction of a post-sale system is an alternative. Unlike the pre-sale system where apartments are sold before construction, the post-sale system allows sales applications only when construction progress exceeds 80%. Construction companies say this allows buyers to inspect every corner of the apartment they will live in and choose accordingly, which helps prevent defect disputes to some extent.

Construction companies also cite the 'precast concrete' (PC) method, so-called 'prefabricated apartments,' as a way to prevent defects. Even now, PC components manufactured in factories are used to minimize leakage problems in apartment bathrooms or roofs on the top floors. If this method is used more extensively in apartment construction, the probability of defects can be further reduced.

No matter how advanced technology becomes, finishing work must be done by human hands. Many defect dispute cases arise from wallpapering, tiling, and furniture finishing. Skilled labor is needed to eliminate these problems. The industry’s comment that "defects increased as unskilled foreign workers were employed more due to rising labor costs" should not be ignored. It is also the government’s role to provide education for foreign workers to acquire skills and establish a foundation for them to work long-term at construction sites.

Earlier this month, the Ministry of Land, Infrastructure and Transport announced that a special inspection of 23 apartments nearing completion found as many as 1,000 defects. While it is important for the government to detect defects and mediate disputes, reducing the possibility of defects from the start is the way to cut unnecessary social costs.

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