Public Apartments Will Put up Installment Sale Only after Construction from 2007

Apartments constructed from this year will now follow a new system obliging installment sales only after the completion of construction. Starting in 2007, all public apartments constructed by the Korea National Housing Corporation and other public organizations are required to initiate installment sales only after the construction is finished.

However, the construction companies can decide the timing of the installment sale for their privately constructed apartments without any support of national housing funds or using public lands.

The Ministry of Construction and Transportation announced that they have finalized the policy of “Activating After-construction Installment Sale” at the Cabinet meeting on February 3.

Accordingly, the selected public apartments, planned for construction from this year until 2006, will test the system by starting the installment sale when the construction is 80 percent completed. The Dongyang Apartments in Incheon, with 478 units and Moonjeong and Gangseo area of Seoul, were selected for the test-adoption.

All the public apartments will adopt the system from 2007. One condition applies that the timing of the installment sale will be in gradual stages to prevent a sudden drop in supply. The installment sales in 2007 will start once the construction is 40 percent complete, and the percentage increases by 20 percent in two years until it reaches 80 percent in 2011.

Apartments constructed by private companies will be separate from the apartments which receive national funds and apartments built upon public land and encouraged to adopt the system later. The funded apartments will start the installment sale after 40 percent of the construction is completed starting this year with the increase of the fund from 60 million won per family to 80 million as well as the decrease of the yearly interest rate from 6.0 percent to 5.5 percent. Also, if the privately-constructed apartments adopt the new system, they will have advance rights in allocating the public lands. “In 2012, the percentage of the apartments that start their installment sale when the construction is 80 percent completed will reach the 50 percent level among all 280,000 households,” said an official at the Ministry.

Jae-Seong Hwang jsonhng@donga.com