About 10,000 apartment units where residents can pay only six to 16 percent of prices for a long-term residence will be provided in six cities near Seoul, including Incheon, Ansan, and Hwaseong. While the measure intends to help the houseless with limited funds, some point that its feasibility is low due to the limitation of the project to have construction companies bear losses in case of housing price decrease.
The special real estate committee of the Democratic Party of Korea announced on Thursday that pilot project sites in six regions – Banwol and Shihwa, Ansan; Neung-dong, Hwaseong; Chopyeong, Uiwang; Unjeong, Paju; Shihwa, Shiheung – will be provided this year to build 10,785 housing units. It also announced a plan to supply 5,800 units by switching reserved sites in Phase 2 New Towns, such as Dongtan 2, Hwaseong; Hoechoen, Yangju; Unjeong 3 Paju; Godeok Pyeongtaek, to housing sites.
The “Nuguna Gip” project is a type of private rental housing with public support in which residents can own property after residing for a decade as tenants. Residents obtain the right to own a property by paying six to 16 percent of its price determined at the point of move in. The gains made from selling the property owned after 10 years belong to the respective resident.
Although the project provides long-term residence, it is uncertain whether the private sector will actively participate. According to the project’s rules, the profits of private construction companies are limited to 10% of the appropriate development gains. If housing prices fall below sales prices, part of the losses accrued for residents should be compensated with construction companies’ development gains.
Moreover, the sites announced for the “Nuguna Gip” project were already selected as housing sites and are under development. Except for the Shihwa district with the capability of 3,300 units, switched from distribution sites to housing sites, they have been already intended to build private rental housing with public support or apartment units for sale. The volume of housing supply did not increase additionally. Only how they will be supplied changed.
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