No Apartments Below Price Cap This Year

From this September, a price cap on the sale of new apartments will be exercised on apartment buildings built on private land, but there will be hardly any supply for four months once this change occurs.

Those who were planning to subscribe for these apartment buildings in hopes of cheaper prices will have to wait till next year.

According to a survey of 20 construction companies such as GS Engineering and Construction, Samsung Engineering and Construction, Hyundai Engineering and Construction, Daewoo Engineering and Construction, and Daelim, only 84,504 new private apartment buildings will be supplied from September till the end of the year.

However, these new apartment buildings will be built under the current system without the price cap. So far, there has not been a single apartment building built under the price cap this year.

The construction industry is planning to defer all new business approval applications to next year.

Apartment buildings that are distributed before the end of November will be exempt from the price cap if business approval was applied for prior to September.

Samsung Engineering and Construction finished the business application process on 8,100 apartments in January and is planning to finish the distribution application process before the end of November. This would allow Samsung Engineering and Construction to be exempted from the price cap.

GS Engineering and Construction, which is planning to distribute 8,300 units from September till the end of this year, has already finished the business application process for most of the apartments. For those it has not finished, it is planning to do so before September. This means that there will be no new apartments affected by the new price cap. The situation is the same for most construction companies.

“There is no reason to hurry and put new apartments affected by price cap in the early stage. We also want to wait to see how policies change after the new administration takes office next year,” said an employee in the construction industry.

There is much debate on the effectiveness of this new price cap on these private apartments, because some public apartment buildings that were distributed under this system were distributed for a higher price than nearby apartments.

According to a council of seven construction companies including Shinyoung, which will sell apartments in Namyangju, Gyeonggi Province, on August 24, the expected charge will be five to 7.5 million won for every 3.3 m² of apartment space. This price is 30 percent higher than the rate for nearby apartments, which is five to six million won.

“This is the appropriate price after taking into account the land cost, construction cost, luxurious finishing touches, and other costs,” said one member of the council.

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