Forbidding Resale of Ownership on Apartments that Reflect Prime Costs

Starting from early next year, the resale of ownership of apartments that have limits on their ownership prices will be forbidden. In addition, even after actually moving into the apartment, the owner cannot sell it for a certain period of time.

According to the Ministry of Construction and Transportation (MCT) on September 1, on August 31, the Uri Party submitted an amendment on the housing bill to the National Assembly, stipulating that residences distributed from public land, under the size of 25.7-pyong, would have a ceiling price by applying a “prime cost reflection.”

The amendment also states that major elements of the housing prices of small residences distributed from public land, under the size of 25.7-pyong, such as land cost, construction cost, design and supervision costs, and other attached costs are to be disclosed to the public.

The ceiling prices for apartments will be decided by the government, which will set the ceiling price reflecting the actual costs of the apartment, such as land and construction costs, and will be in effect by no later than March next year. It seems that the second wave of apartments to be built in the Gyeonggi Seungnam Pangyo City and Hwasung Dongtan City will fall under this ceiling price system.

The MCT plans to prohibit the resale of ownership of apartments sold under the ceiling price system as well as selling the apartments even after living in them for a while, perhaps three to five years.

Furthermore, the MCT is considering plans to give priority to those without an apartment or with old “apartment purchase application accounts” in order to prevent excessive competition when distributing housing.

MCT Housing Policy Department Director Park Sang-woo said, “If the apartment prices reflect the prime costs, the apartments will sell 20 to 30 percent cheaper so there is the possibility of speculators wanting a piece. In order to prevent this from happening, measures such as forbidding the resale of ownership, forbidding to sell the house until after a certain period, and restricting those applying for an apartment are necessary.”

Kwang-Hyun Kim kkh@donga.com