Some Want Lower Official Housing Prices

There have been many requests from residents of the Gangnam area of Seoul and Bundang-gu, Seongnam, Gyeonggi Province, to lower the official housing prices of their neighborhoods in fear of increasing possession taxes. The official housing prices of these areas have recently increased significantly.

In particular, more than one out of 10 households in Bundang have demanded that its official housing prices be lowered.

The Ministry of Construction and Transportation (MOCT) said yesterday that 74,533 (or 47,596 cases) out of 8,713,829 households, or 0.9 percent, made such demands in May after it announced the nationwide official housing prices on April 28.

Ninety-four percent (or 44,734 cases) of the objections it received demanded that the prices be readjusted downward while 6.0 percent (2,862 cases) wanted an upward readjustment.

The biggest reason for requests for a downward prices readjustment was ‘excessive tax burdens’ (50.3 percent) and the most important reason why others wanted the prices to be increased was because of the gap between official prices and market prices. (51.2 percent)

Out of 102,959 households in Bundang-gu, where the prices increased most in the nation, 12,091, or 11.7 percent, filed an objection to the MOCT. The official housing prices of Bundang went up by 39.1 percent from last year.

Eight thousand one hundred twenty-two out of 120,597 households (6.7 percent) of Songpa-gu and 6,800 out of 126,717 households (5.4 percent) of Gangnam-gu, Seoul filed an objection regarding the official prices. The prices increased by 23.2 percent and 24.2 percent in Songpa-gu and Gangnam-gu, respectively, from last year.

There were particularly many class petitions this year. Participation of at least 30 percent of an apartment complex with more than 50 households is needed to file a class petition.

Seventy percent (33,320 cases) of the whole objections, and 80.6 percent (60,056 households) of the entire households who wanted prices readjustment were class petitions.

The MOCT plans to readjust the prices until June 22 by taking an on-site examination and interviewing housing owners, and then announcing the readjusted prices on June 30 after referring to a deliberation of a council on real estate evaluation.

It is expected, however, that most of the objections will be rejected, as the MOCT believes it is natural that official housing prices have increased as housing prices went up.

Joong-Hyun Park sanjuck@donga.com