Government Delays Abolition of Apartment Joint Sales System in Seoul and Incheon

The restriction on joint sales of apartments in Seoul and Incheon area will probably not be abolished until the end of August.

The Ministry of Construction and Transportation (MCT) said on July 3, “We were originally planning to discontinue the joint sales system of apartments this month, but due to unstable housing prices, including a sudden rise in housing prices in some Metropolitan areas, we decided to put off the abolition.”

The MCT recently asked the Seoul Metropolitan Government (SMG) and the Incheon Metropolitan City (IMC) to “keep the joint sales system for a while,” saying that “it would discuss the abolition of the system together with comprehensive countermeasures against real estate speculation, at the end of August.”

Accordingly, if the SMG and the IMC accept the MCT’s request, construction companies which want to sell more than 20-household apartment buildings should compulsorily participate in joint sales for the time being.

An official of the MCT said, “The abolition of joint sales of apartments will possibly make housing prices fluctuate due to bad side effects, including overheated competition in the industry, hikes in the sale prices of newly-built apartments, and increases in old apartment sale prices,” adding, “Unless market instability dies down, the discontinuance of the joint sales restriction will not be put in force until the end of this year.”

The SMG was planning to abolish the joint sales restriction in May 2005 according to the government’s policy set in March, but it set aside the abolition in accordance with the MCT’s suggestion that the decision on the abolition should be postponed until early July after observing market conditions further.

Jae-Seong Hwang jsonhng@donga.com