"The Sales Market May Be Dead, But We Can't Just Play Dead"… 'Packed' SH Corporation Purchase Lease Briefing Session

On the afternoon of the 11th, the "2025 1st New Contract Purchase Rental Housing Project Briefing Session" is being held at the main auditorium of Seoul Housing and Communities Corporation (SH Corporation). Photo by Lee Jung-yoon

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"The market for row houses and multi-family housing sales has completely collapsed. Since we can't just sit idle, we came to the briefing session."

At around 3 p.m. on the 11th, the main auditorium of Seoul Housing and Communities Corporation (SH Corporation) in Gaepo-dong, Gangnam-gu, Seoul, was filled with representatives from small construction companies. They gathered to find a glimmer of hope as the market for row houses and multi-family housing collapsed due to the aftermath of rental fraud and the construction industry downturn.

SH Corporation announced on the 4th that it will purchase 2,917 newly constructed contract-type rental housing units this year and held the "2025 1st New Construction Contract Rental Housing Business Briefing" on this day. Newly constructed contract rental housing refers to public rental housing where a pre-purchase agreement is made between SH Corporation and the seller for housing built by the private sector, and after completion, SH Corporation purchases and supplies the housing. SH Corporation buys row houses, multi-family houses, urban lifestyle housing, apartments, residential officetels, and rental dormitories, then supplies them in five types: Newlywed I, Newlywed II (linked with Mirinae House), General, Youth, and Rental Dormitory. For small construction companies, it was difficult to operate their business as there were no buyers even if they built houses. However, since SH Corporation promises to purchase the houses, many saw this as an opportunity and attended the session. An SH Corporation official said, "It seems that more than 200 people attended the briefing," adding, "The large volume of purchase announcements, improved payment ratios, and shortened project implementation periods as incentives are attracting attention."

Because the purchase scale is larger than in previous years, many showed interest. A construction company representative said, "Rather than considering business feasibility, I attended because the largest volume has been announced recently." Last year, the 1st new construction contract rental housing purchase in April announced a total of 712 units in three types: Youth, Rental Dormitory, and Newlywed I. In November of the same year, the 2nd purchase announced a total of 2,400 units in types such as Rental Dormitory and Newlywed II.

To expedite project implementation, SH Corporation shortened the period from purchase announcement to contract signing from 8 months to 5 months, reducing it by 3 months. To help alleviate developers' financial difficulties, the payment ratio was also improved. Previously, 40% was paid as contract deposit, 20% as down payment, and 40% as balance; going forward, the payment method will change to 50% contract deposit, 30% down payment, and 20% balance. Additionally, financial support is strengthened by enabling low-interest loans from first-tier financial institutions up to 90% of the total project cost using the Urban Housing Special Guarantee product from the Housing and Urban Guarantee Corporation (HUG).

After SH Corporation’s explanation, questions poured in about how the purchase price of the houses SH Corporation buys is determined and about the appraisal of the houses. One participant hinted, "Since the market is difficult and everyone is cautious, construction companies and homeowners are inevitably sensitive about appraisals." SH Corporation does not set a purchase price ceiling but plans to set prices considering this year’s budget. The purchase price is determined by the arithmetic average of the appraisal amounts from two appraisal firms, one selected by SH Corporation and one by the seller. The appraisal is conducted twice in total, with the final purchase price decided through the second appraisal, after which the contract is signed.

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