Will the pre-subscribed price of public housing be lowered if it is supplied at the cost of public housing site construction?

Candidate Jae-myung Lee, supply of public housing site construction cost
Candidate Seok-Yeol Yoon, pledges to youth cost housing, etc.
In order to realize lower public housing prices
We need to resolve market tax gains, LH debt, etc.

Gyeonggi Pangyo Sanun Village Public Housing Complex. provided by LH

Democratic Party presidential candidate Lee Jae-myung made a promise to supply 3.11 million units nationwide on the 23rd, and the public housing site construction cost supply policy is attracting attention. If this promise is realized by the next government, it is expected that the pre-sale price of public housing in the metropolitan area, including the housing for which the pre-order has been conducted until the 4th, is expected to decrease significantly. Experts point out that lowering the presale price of public housing is a necessary policy direction to provide ‘affordable level’ housing to non-homeowners, but there are many challenges to be solved in order to actually supply public housing at the cost of construction. According to the Korea Land and Housing Corporation (LH) and the real estate industry on the 1st, the recent rapid rise in housing prices in public housing sites in the metropolitan area is increasing the burden on consumers. The public sale apartment with an exclusive area of ​​59 to 84 square meters in Changneung New Town, Goyang, which first appeared in the pre-order for the 4th public housing in the metropolitan area, which completed the subscription on January 21, surpassed the market expectations with an estimated sale price of 18.9 million to 19.8 million won per 3.3 square meters. passed In addition, the sale price of 55㎡ for the exclusive area of ​​Newlyweds Hope Town in Daebang-dong, Seoul was 28.54 million won per 3.3㎡, the highest price ever for a small public housing. The Ministry of Land, Infrastructure and Transport emphasizes that the estimated sale price of public housing is usually 60 to 80% of the market price, but the reality is that the price of public housing has risen as much as apartment prices in the metropolitan area have surged in recent years. For example, in the case of this estimated public sale price in Changneung New City, Goyang, the price has more than doubled in 7 years compared to the public sale price supplied in the neighboring Wonheung district in 2014. At that time, the sale price of 84 square meters of public housing in Wonheung district of LH was in the range of 8.7 million to 9 million won per 3.3 square meters. The increase in housing pre-sale prices in public housing sites to which the sale price ceiling system is applied is considered to be the main reason for the increase in housing land cost. The housing sale price under the pre-sale price ceiling system is set as ‘housing land cost + construction cost + additional cost’, because the supply price is determined based on the appraised price that reflects the market price for the housing site cost, which has the largest proportion. The housing land cost included in the estimated sale price of the pre-ordered housing is reflected in the market price of the relevant housing site in the ‘simple appraised price’ method. In the real estate industry, if Candidate Lee is elected and the standard of public housing site supply price is changed to the construction cost, it is expected that the estimated sale price offered by LH in the ongoing public housing subscription in the metropolitan area will drop significantly at the time of the main subscription. Even the Ministry of Land, Infrastructure and Transport, which oversees the advance subscription for public housing sites, cannot deny this. An official from the Public Housing Site Planning Division of the Ministry of Land, Infrastructure and Transport said, “Even if it is assumed that differentiated standards such as ‘100 to 150% or less’ of the construction cost are applied depending on the size or type of housing, if the housing site supply price standards change, the public housing sale price will be lower than the current estimated sale price. It is highly likely,” he said. Experts say that not only Lee Jae-myung, but also candidate Yoon Seok-yeol’s promise of ‘supply of 300,000 youth cost housing’, which is the promise of reducing public housing sale prices to the cost level, is a premise for the two candidates’ public housing policies as a ‘common denominator’. analyze that there is However, it is pointed out that there are tasks that need to be addressed in order to supply public housing at a lower price than the current level. Currently, public sale has restrictions on resale and residence obligation, and in the case of Newlyweds Hope Town, a portion of the market profit is recovered by applying a profit-sharing mortgage. The task remains to design a more sophisticated institutional device for recovering rapid market capital gains within an appropriate range. Structural reform of LH, a public housing operator, and measures to improve its financial structure are also needed. This is because LH is currently making up for the loss in the public rental housing sector with profits from public sale, which is its own business, and housing land sold to the private sector. Lim Jae-man, a professor at Sejong University (Real Estate), said, “It is realistically difficult to prevent LH from making profits from the sale of land and the housing business, given that LH’s rental loss was 1.6 trillion won last year and 120 million won per household.” Discussions on structural reform of LH, such as the establishment of an organization dedicated to housing welfare, should take precedence,” he said. By Choi Jong-hoon, staff reporter [email protected]


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