Flexible Price System to Start Next Year

A “flexible price system based on other prices” will be applied to apartments on public land starting in February 2006. The system will calculate apartment prices based on the public land price and standard construction costs.

Therefore, the sale of apartments in Pangyo, Gyeonggi Province, scheduled for next March, will be affected by the system. The price of apartments under 25.7 pyong and 33 pyong is expected to be around 10.5 million won per pyong and 270 million won per pyong respectively.

The Construction and Transportation Committee of the National Assembly held a general meeting on Wednesday to pass a bill revising the Housing Law, which is a follow-up measure of the 8/31 Comprehensive Real Estate Plan.

If the regular session of the National Assembly passes the revised bill within this year, the bill will be exercised next February.

The bill also includes a bond bidding system in which applicants who submit the highest housing bond price for apartments under 25.7 pyong will have the right to buy it.

Besides this, apartments on public land will have to reveal information regarding the direct and indirect construction costs additionally. Presently, the construction costs open to the public include land price, design cost, supervision fee, closing cost, and additional fees. Apartments larger than 25.7 pyong, built by private construction companies, will also have to reveal the land price and purchasing price.

In order to prevent the first buyer from gaining excessive marginal profits by selling the apartment at a higher price, the bill includes the regulation that the sale of the apartments or the right to buy is prohibited for 10 years for apartments under 25.7 pyong, and five years for apartments larger than 25.7 pyong. As for apartments in local provinces, the period is five years and three years respectively.

The National Assembly also passed a revised bill to expand the minimum development scale for national rental housing from the current 300,000 pyong to 600,000 pyong.

Seung-Heon Lee ddr@donga.com