Korea National Housing Corporation Won’t Disclose Construction Cost of Apartments

Korea National Housing Corporation will likely decide against disclosing the construction costs of the housing complexes it will build.

As a measure to redistribute the profit it makes through the sale of public apartments, the corporation will likely issue bonds that will be sold to bidders for preconstruction sale of its apartments.

At its final meeting on May 19, the Housing Supply Review Commission, headed by Prof. Kim Jeong-ho of the Korea Development Institute, submitted its final proposal to the Ministry of Construction and Transportation.

After a public hearing scheduled for June 4, the ministry will finalize the measure.

“The public disclosure of construction costs has yet to prove its effectiveness in stabilizing housing prices. There are a number of technical difficulties involving it,” the commission said. “Legal consultants opined that the disclosure itself is unreasonable, so we tilted away from the disclosure.”

Regarding the social redistribution of the proceeds from public housing projects, the commission proposed that 25.7-square-meter-plus public housing sites should not be auctioned off by casting lots as it does currently. It said the issuance of bonds should be introduced so the highest bidder can buy the site.

As for housing sites smaller than 25.7 square meters, the commission proposed as follows: a bond-based bid process should be introduced; they should be sold at an appraised price as they are currently, but their prices need to be tied to construction costs; and there should be a ceiling on the resale price of public apartments for those who bought cheap but want to sell dearly in the short term.

Once bonds are introduced, the proceeds from them will be put into the national housing fund which is designed to finance the development of leased houses and middle-income housing sites.

Kwang-Hyun Kim kkh@donga.com