Concerns Raised Over Construction Companies' Tricks Due to Government's Excessive Sale Price Controls
"Nonetheless, Sale Popularity in the Capital Area Will Continue... Sale Prices Far Below Market Value"
[Asia Economy Reporter Lim On-yu] An apartment with balcony extension fees reaching up to 100 million KRW has emerged, sparking controversy. While prospective buyers express dissatisfaction over the excessive costs, some argue that this is an abnormal phenomenon caused by the government's price control on pre-sale prices.
According to the real estate industry on the 2nd, the integrated balcony extension fee for the H Apartment in Sosabon-dong, Bucheon, which will be pre-sold on the 8th, has been set at a minimum of 86.57 million KRW and a maximum of 141.13 million KRW. For 59㎡A (exclusive area), 59㎡B, and 65㎡ units, the fee is 86.57 million KRW; for 74㎡A, 74㎡B, 81㎡A, and 81㎡B units, it is 108.57 million KRW. For the 102㎡A unit, the fee reaches 141.13 million KRW.
Considering that balcony extension fees usually do not exceed 20 million KRW even when high, this is a level far above market prices. In fact, the Bucheon Illumi State, which was pre-sold last year in Bucheon and recorded the highest number of applicants in the area’s history, had balcony extension fees ranging from a minimum of 6.53 million KRW to a maximum of 11.9 million KRW. Similarly, the e-Pyeonhansesang Namyang New Town in Namyang-eup, Hwaseong City, which is being pre-sold around the same time as the H Apartment, has fees ranging from 5.638 million KRW to 10.874 million KRW.
As the integrated balcony extension fee for the H Apartment was announced through the resident recruitment notice, prospective buyers have voiced their dissatisfaction. Mr. A, in his 40s, who has been considering applying for this complex, said, "They try to charge higher extension fees by attaching the word 'integrated,' but it is not significantly different in content from a regular balcony," adding, "Prospective buyers have no choice but to accept it reluctantly."
Although the resident recruitment notice states that "the integrated balcony contract is optional," it is not easy to choose not to extend. The integrated balcony includes essential elements such as balcony extension, shoe cabinets, built-in wardrobes, and system windows. Moreover, if the contract holder extends the balcony individually after moving in, the construction cost is relatively higher, and there is a greater possibility of defects such as condensation and leakage, resulting in very low demand for non-extension.
Some view this abnormal phenomenon as stemming from the government's pre-sale price control. Bucheon is a regulated area and is not subject to the private land pre-sale price ceiling system, but it is subject to the Korea Housing & Urban Guarantee Corporation (HUG)'s high pre-sale price control. Therefore, it is suspected that the low pre-sale price is set to attract buyers, while the balcony extension fees are set high to secure profits.
A real estate industry official said, "Even including option fees, the pre-sale price is still lower than the market price, so the popularity of apartments in the metropolitan area will continue," adding, "Recently, the balcony extension fee of the Yongmasan Moa Elga Park Foret in Myeonmok-dong, Seoul, also caused controversy, but the first-priority application competition rate reached 48 to 1."
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