On the 4th, Minister of Land, Infrastructure and Transport Byun Chang-heum announced a plan to dramatically expand the supply of housing in 3080+ metropolitan areas led by the public. /Photo = Yonhap News
Despite the government’s announcement of a large-scale supply plan, the rise in house prices has not stopped. The government announced on the 4th that it will supply 320,000 units to Seoul and 830,000 units nationwide by 2025. However, sales and jeonse prices continue to rise from Seoul to the metropolitan area and local regions. Although the rise was somewhat reduced, it is analyzed that supply measures are not enough to stabilize the immediate market. In the midst of this, Minister of Land, Infrastructure and Transport Byun Chang-heum said that this measure can be expected to lower house prices.
The second week of February (as of the 8th) announced by the Korea Real Estate Agency (formerly the Korea Appraisal Board) on the 11th, the nationwide apartment sales price rose 0.27%, slightly lower than last week (0.28%), but continued the upward trend. Apartment prices in Seoul rose by 0.09%, slowing down from last week (1.0%), but in the metropolitan area, including Seoul, it was 0.33%, the same as last week. This rate of increase is the highest rate since the real estate agency statistics were prepared.
0.33% increase in housing prices in the metropolitan area… Still high
These statistics were the first market trends that came out after the government announced the second and fourth measures. Seoul and Gyeonggi-do showed weak growth, but as the rate of increase in Incheon increased, the overall increase rate of the metropolitan area was maintained. The Korea Real Estate Agency explained, “In Seoul, there was an expectation for market stabilization due to the effects of the 2·4 supply measures, and the buying trend of mid- to low-priced apartments was steady,” he said. “In some regions where the rise was high, the rate of increase decreased.”
In Seoul, Songpa-gu rose 0.14% to the highest rate, but compared to last week (0.17%), it fell. Gangnam-gu was 0.12% the same as last week, and Seocho-gu expanded from 0.11% to 0.12%. Gangdong-gu decreased from 0.1% to 0.08%. Mapo (0.14% → 0.11%) and Nowon (0.15% → 0.1%), which showed a remarkable increase in recent years, also narrowed. Guro (0.07%), Gangseo (0.09%), and Dobong-gu (0.11%) and other outlying areas increased again.
Even with the 2nd and 4th real estate measures, the nationwide increase in house prices continues. However, in Seoul and Gyeonggi, the rate of increase was somewhat slow. / Photo = News 1
Gyeonggi-do has decreased from 0.47% last week to 0.46% this week, but Incheon has increased from 0.31% to 0.37%. In Gyeonggi-do, Sangnok-gu (1.12%) and Danwon-gu (0.72%) in Ansan rose significantly due to favorable traffic on the Metropolitan Express Railway (GTX)-C route. Uiwang City (1.07%), Yangju City (0.98%), Uijeongbu City (0.77%), Dongducheon City (0.67%), and Hanam City (0.47%) also showed high levels. In Incheon, Yeonsu-gu (0.71%) rose to the center of the Yeonsu-Dongchun-dong construction complex, which is relatively cheap compared to the Songdo new city.
The rise of the five major metropolitan cities in the region slowed slightly from 0.31% to 0.29%. Daejeon 0.41%, Daegu 0.4%, Busan 0.31%, Ulsan 0.2%, Gwangju 0.07%, and Sejong showed 0.17%.
Byun Chang-heum “The price of a house is lowered by the Gong Gong-judo…
The public-led reconstruction, redevelopment, and other maintenance projects that the government has put forward will serve as a developer for public enterprises such as the Korea Land and Housing Corporation (LH). Construction is carried out by a private company, which is a structure in which the public company clears the price bubble and induces a decline in pre-sale prices. The government believes that such cuts in pre-sale prices could lead to lower house prices.
Minister of Land, Infrastructure and Transport Byun Chang-heum appeared on the KBS Radio 1’Economic Show of Hong Sa-hoon’ on the 10th and said, “If the supply of high-quality affordable housing is expanded through the 2·4 supply measures, it may go beyond stabilizing the skyrocketing house prices and lower than the current level.” Expected.
When asked if the public agency’s provision of housing does not mean that it will lower the price of the house beyond the level of stabilizing it, he responded with consensus to Minister Byun. He said, “We are going to show that we can continue to supply housing in the city and prevent the increase in house prices caused by anxiety. If we continue to supply cheap housing, we will be able to downgrade.”
He pointed out that even if the private sector supplies housing, the problem is that the sale price is high. Minister Byeon explained, “In the case of a private reconstruction association, even if the contractor insists on an increase in cost during construction, it has shown a position to accept a high sale price contract,” he said. “This has caused the reconstruction complex to cause unstable apartment prices.” .
He said, “If the initial pre-sale price is too high, it is difficult to expect a stable house price.” “The public-led reconstruction introduced in the 2nd and 4th supply measures is a public corporation such as LH, a veteran of the public corporation, that the subject of signing the contract with the contractor is the construction cost bubble. It is a structure that can be filtered.”
Responding to the question that landlords may be dissatisfied with the method of lowering the sale price by reducing the construction cost, Minister Byun said, “The important thing is to increase the proportionality and lower the share, and the level of sale price itself does not require the landlord to care.” It was said that it would increase the profit return to the company by 10-20% points compared to the existing development method, but if the proportionality of the original business is 120%, it could be increased to 150%.”
Meanwhile, in real estate communities and cafés, there is a prospect that housing prices will continue to rise despite this supply measure. In Seoul, most of the opinions are that the supply is difficult to resolve, given that the houses to be released are the private choice. In the metropolitan area, demand is expected to be polarized for low- and mid-priced houses and new apartments that can be borrowed.
Hankyung.com reporter Kim Hana [email protected]