Unit Price, 258.51 Million Won; Selling Price, 367.97 Million Won

It costs 258.51 million won (7.78 million won a pyeong) to build a 33-pyeong apartment in Jangji-dong, Songpa-gu in Seoul, while it costs 185.46 million won (5.63 million won a pyeong) to build a same size apartment in Balsan-dong, Gangseo-gu.

The SH Housing construction company affiliated with the Seoul metropolitan government announced its different selling prices and its margin for the 10th and 11th complexes in Jangji and the 2nd complex in Balsan on April 26.

Selling Price Determined by Land Price –

What is notable about the announced prices is the difference in land price between unit selling prices and selling prices. SH, when determining the selling price, used two different calculations: a land price that was set by the appraisal price at the time of construction completion, and a construction cost that was determined after 5% was added to the unit construction cost. Therefore, land price, not the construction cost (as it does not affect the selling price much), which can be different from when land was acquired compared to when it was appraised, made a huge gap between unit selling prices and selling prices.

Indeed, the land price of a 33-pyeong flat in the 2nd apartment complex in Balsan accounted for 75.39 million won, but it jumped 48% to 111.69 million won. The unit selling price was 185.46 million won but the selling price increased by 22.6% to 227.33 million won. For a 33-pyeong apartment in the 11th complex, unit land price was 126.04 million won, but when determining the selling price, the land price jumped a whopping 81% to 228.80 million won.

This shows the selling price, when the land appraisal price is reflected, went up over 42% (100 million won) to 367.97 million won from 258.51 million won. SH gained a total of 39 billion won or 6.2 million to 102.75 million won from each apartment. The apartments that disclosed unit selling prices include 357 complexes in Balsan, and 189 apartments and 398 apartments in the 10th and 11th Jangji complexes, and will be provided to the underprivileged that used to live in the areas.

May Help Lower Selling Prices-

Disclosure of unit prices by SH will directly or indirectly affect the selling pricing policy of private apartment builders because the comparison of prices may push them to lower their selling prices, which are too high. There are, however, some people who think it will not have much effect as the land price is one of the most important variables in determining the selling price.

While SH, as an affiliate of the government, was able to buy a great deal of land at a fixed price of 5.5 million won a pyeong (Jangji), private builders will not be able to do so. In the meantime, areas near the apartment complexes SH built expect to see the apartment prices in some areas stabilized because they set selling prices rather low.

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