Sharp Increase to 37,410 Objections Against Detached Site Valuation Standards
Calls to Raise High-Value Housing Realization Rate Amid Tax Equity Concerns
"Price Criteria Must Be Transparently Disclosed"
[Asia Economy Reporter Lee Chun-hee] Mr. A, who resides in 'Jamsil Els' in Jamsil-dong, Songpa-gu, Seoul, was puzzled upon seeing the publicly announced apartment prices on the 29th. The apartment on the north side of the complex along the Han River, which is considered to have a premium, was priced lower than a unit inside the complex without any special features.
This year, the publicly announced price for an 84㎡ (exclusive area) unit on the 17th floor of a building with a Han River view in the complex was set at 1.395 billion KRW. This is 36 million KRW lower than the 1.431 billion KRW price for a unit on the same floor and facing the same direction inside the complex. He said, "Even within the 84㎡ units in the complex, those with a Han River view trade for around 200 million KRW more," adding, "So it is hard to understand why the publicly announced price is actually lower."
As the Ministry of Land, Infrastructure and Transport finalized and announced this year's apartment prices after receiving objections, controversy over the price calculation process has only intensified. The government raised the prices by nearly 6% this year, citing price realism, but criticism continues over the unclear basis for the increase, leading to ongoing dissatisfaction.
In Seoul, the average apartment price rose by 14.7% this year, and Daejeon also recorded a double-digit increase of 14.03%. The problem is that the price hikes were concentrated on high-priced homes. The publicly announced price for homes valued at 900 million KRW or more rose by 21.12%. Especially for ultra-high-priced homes worth 1.5 billion KRW or more, the increase was 26.15% for those between 1.5 billion KRW and less than 3 billion KRW, and 27.40% for those above 3 billion KRW, far exceeding the average. In the Gangnam area, some places saw increases around 40%.
This Year's Increase Rate of Officially Announced Prices for Apartment Complexes by Seoul Autonomous Districts (Provided by the Ministry of Land, Infrastructure and Transport)
Homeowners responded that while the price increase was inevitable given last year's sharp rise in housing prices, they could not understand the 'uneven' increases. Mr. B, who owns a home in Banpo-dong, Seocho-gu, pointed out, "Even within the same complex, transaction prices can differ by hundreds of millions of KRW depending on location, floor, direction, and layout, so I question whether these factors were properly reflected in the price calculation."
Moreover, considering the positions previously stated by the Ministry of Land and the Korea Appraisal Board, it is even harder to avoid criticism that the price calculation is arbitrary. In fact, during last year's price calculation process, the Korea Appraisal Board lowered the price of a Han River-side apartment in Seongdong-gu, citing "the need to additionally reflect the price drop due to differences in floor utility and changes in market conditions." This was because a new high-rise mixed-use building was constructed nearby, worsening factors such as the Han River view. This implicitly acknowledged that views like the Han River view are a key indicator in price calculation.
Despite the annual controversies, clear improvements have not been made because the government insists on 'opaque calculation.' For apartments and other multi-unit housing, prices are calculated based on nearby transaction cases, but the government does not provide any specific criteria. The workload of the Korea Appraisal Board, which is responsible for price calculation, is also an issue. Although 13.83 million households nationwide were subject to price calculation this time, the number of personnel responsible for the task is reportedly around 550.
Change Rate of Officially Announced Prices for Apartment Complexes by Price Range This Year (Provided by Ministry of Land, Infrastructure and Transport)
Some argue that the government arbitrarily calculates prices, seriously undermining tax fairness. This is because the rate of reflecting market prices was differentiated, with 68.1% for homes under 900 million KRW and 72.2% for those above, artificially raising the prices of high-end homes.
Nevertheless, the government remains unmoved. This year, objections to apartment price calculations surged by 30% to 37,410 cases compared to 28,735 last year, but only 915 cases (2.4%) were accepted. This is a significant drop compared to last year's acceptance rate of 21.5%. It is also controversial that among upward revision requests, only 6.1% (130 out of 2,124) were accepted, while among downward revision requests, only 2.2% (785 out of 35,286) were accepted.
Experts point out that since the publicly announced prices serve as the tax base for various taxes such as property tax and comprehensive real estate tax, as well as health insurance premiums, transparency in the calculation process must be strengthened. Professor Kwon Dae-jung of Myongji University's Department of Real Estate said, "It is unreasonable for the Korea Appraisal Board, which does not conduct actual appraisals, to calculate the publicly announced prices," adding, "As long as criteria that are not connected to the field are applied, problems will inevitably continue." He advised, "The Korea Association of Certified Appraisers, which conducts actual appraisals, should be responsible for the calculation, and all related criteria should be fully disclosed transparently."
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