[Beginner's Guide to Buying a House] 600 Million or 900 Million? Which Home Price Should I Look At?

[Asia Economy Reporter Lee Chunhee] When you become a real estate reporter, you often get unexpected KakaoTalk messages from friends. "How do I apply for a housing subscription?" "What is first priority?" For the 2030 'Burin-i (Real Estate + Beginner)' who only have subscription savings accounts created by their parents when they were young, I am trying to create a guide.

Where can you find the answer to "How much is our house worth?" The simplest answer is undoubtedly the 'actual transaction price.' Before the Participatory Government introduced the actual transaction price disclosure system through the August 31, 2005 real estate policy, prices were truly chaotic. One of the suspicions that always comes up during confirmation hearings for high-ranking public officials is "You wrote a down contract 20 years ago, right?" In the past, to reduce tax burdens, it was common to report a lower transaction amount, so 'down contracts' were frequently made for this purpose.

However, as reporting actual transaction prices became mandatory and related data was transparently disclosed, many of these up/down contracts disappeared. Transactions became transparent, and relevant authorities regularly review whether transactions are normal or abnormal based on related laws. Also, from the perspective of house seekers, by simply accessing the Ministry of Land, Infrastructure and Transport's actual transaction price disclosure system or sites that provide related data, you can check real-time actual house prices in places like Busan, Daegu, Jeju, and other regions while sitting in Seoul.

However, it is still difficult to consider actual transaction prices as completely accurate house prices. In situations like recently when rumors of 'urgent sale' transactions in the Gangnam area are frequent, or when prices rise by 100 million KRW within a few days as a few months ago, actual transaction prices become past prices. This is because, considering the time to process related procedures after the transaction, actual transaction reports are not made immediately but can be reported within up to 60 days. Therefore, during periods of rapid price increases or decreases, complaints such as "Why hasn't the actual transaction been reported yet even though it was traded recently? Is the real estate intentionally delaying it?" were often heard.

However, since February 21, the mandatory reporting period for actual transactions was shortened from the previous 60 days to 30 days, significantly speeding up the reflection of actual transaction prices. Transactions are now registered quickly within just one week, greatly reducing such side effects.

▲ Market price of an apartment in Gangnam-gu, Seoul registered with KB Kookmin Bank (Provided by KB Kookmin Bank)

Another important price is the 'market price.' There is the market price mentioned by local real estate agents, and also the market prices provided by KB Kookmin Bank or the Korea Real Estate Board. As mentioned earlier, since it takes time for actual transaction prices to be registered, there were sometimes differences between actual transaction prices and market prices.

The market price is also important because it serves as a benchmark for loans. As the government has announced successive regulations, for example, in Seoul, ultra-high-priced houses over 1.5 billion KRW are completely ineligible for mortgage loans, and for high-priced houses over 900 million KRW, the loan-to-value ratio (LTV) is limited to 20% on the excess amount. The price used as the loan eligibility criterion is the market price. KB Kookmin Bank and Korea Real Estate Board market prices are used, but it is said that KB Kookmin Bank's market price is mainly used in the field.

Another price is the official assessed price. If the market price is important as a loan benchmark, the official assessed price is an important indicator because it serves as the basis for taxes. The preliminary official assessed price for this year's multi-family housing was recently announced. The government has been continuously raising the official assessed price, saying it is too low compared to the market price. The realization rate for this year is around 70%. If the market price or actual transaction price is 1 billion KRW, the official assessed price is about 700 million KRW. This official assessed price can be checked on the 'Real Estate Official Price Informer' website.

Lastly, there is the 'appraised price.' This price is used for land expropriation or mortgage loans. It is determined by an appraiser according to certain standards. The higher the appraised price, the higher the compensation amount for expropriation or the mortgage loan amount you can receive, so a higher price is better.