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Only One House Purchased by Government in 15 Months

Posted July. 12, 2007 03:28,   


It was revealed that the government has purchased only one house since last year after it announced it would purchase 6,300 medium and large apartments in the capital zone by 2012 and supply them to the middle class.

When Dong-A Ilbo reported in February that the project is showing little progress, the government issued a press release saying that it would “examine the list of potential sellers by March and complete the purchase of 1,000 apartments planned [to be purchased] within this year after April,” but the government has not even made any purchase announcements.

According to the Ministry of Construction and Transportation and the Korea National Housing Corporation (KNHC) on July 11, the government announced through its March 30 Real Estate Measure last year it would purchase 6,300 medium and large apartments in the capital zone covering Seoul, Gyeonggi and Incheon and supply them for rent.

The government had planned last year to purchase 300 unsold or constructed apartments as a model project, and purchase 1,000 apartments each year between this year and 2012.

It was confirmed however that a 109m² (33 pyeong) apartment in Ganseok-dong, Namdong-gu, Incheon, was the only apartment purchased by the KNHC until now.

Even this apartment is one of the 19 apartments the KNHC received applications for sale last year; this year, it has not even made any purchase announcements.

When Dong-A Ilbo pointed out in January this year that, “Only 19 owners of apartments applied to sell their property, and no actual purchase was made,” the government promised to “complete the purchase of apartments by March.”

In a press release the Ministry of Construction and Transportation also announced that it was “expecting applications for sales and the negotiations on prices to be carried out smoothly since the price of houses was being lowered and stabilized.” But there has been little improvement in the project.

The reason little has been achieved on the project to purchase and rent medium and large apartments is because there is a large gap between the price hoped for by potential sellers and the price at which KNHC will buy them. No agreements have been reached because the KNHC is offering prices much lower than market.

Many point out that “the government was either rash to announce the policy even before securing the necessary budget, or too ambitious.”

Some even doubt whether the government will purchase the apartments, since few steps have been taken to purchase apartments despite the prices of houses stabilizing this year.

“We will discuss with the Ministry of Construction and Transportation on the measure to adjust flexibly the annual goal according to the market situation,” explains a person related to KNHC.

jefflee@donga.com koh@donga.com