Investigation of Fund Source for Speculative Areas

The government and the Millennium Democratic Party (MDP) decided to deal effectively to an increased price of reconstruction apartment in Gangnam area Seoul which showed recently the sharp increase in the price.

The ministry of Construction and Transportation (MOCT) and the Seoul Metropolitan Government said, “After the reconstruction of 5 sparsely-populated apartment areas such as Jamsil, Cheongdam-Dogok, Amsa-Myeongil, Banpo and Hwagok was determined, there were many unreasonable reconstruction cases focused on Gangnam area. The reconstruction union or construction company instigated the increase of the apartment price. Accordingly, we took the measure of reconstruction apartment market stabilization including a sanction of a dishonest union or construction company.”

The MDP also said “We are currently investigating a plan which takes the strong measures such as the investigation of a fund source in the speculative areas. We will determine the measures considering a trend of the house price for the coming one week.”

According to the government’s measures, when considering the related regulations or administrative procedures, we reported the reconstruction union or construction company which instigated the increase of the apartment price plotting the reconstruction plan, despite the impossible plan to the Korea Fair Trade Commission (FTC) on the suspicion of exaggerated advertisement. Also, They will have the disadvantage, informed the National Tax Service. The government notified the ward offices in Seoul to minimize an allowable quantity considering the business schedule when specifying or approving the area for the zone plan before the approval of the reconstruction business.

In addition, the government will have the positive public information through carrying the reconstruction-related procedure and facts in a homepage of the Seoul Metropolitan Government and the local newspapers, to protect credulous residents or investors who were deceived by wrong information.

Lee Chun-Hee, the head of Bureau of Housing, the Ministry of Construction and Transportation said “When considering the apartment preservation state, zone plan establishment procedure and allowable floor spare index, one apartment in Gangnam, Seoul has the very low possibility on the reconstruction permission. But, the union selected the construction company for reconstruction and the apartment price sharply increased for KRW 100 million for one month. We have to devote all our energies to prevent these increase on prices.”

Young-A Soh Jae-Seong Hwang sya@donga.com jsonhng@donga.com