'Busan 84㎡ Sale Price 1 Billion Won?'... Union Members Bought Unsold Units for 500 Million Won [2020 National Audit] (Comprehensive)

'Ssangyong The Platinum Sajik Asiad' in Sajik-dong, Dongnae-gu, Busan (Source: Sajik Asiad Regional Housing Association website)

[Asia Economy Reporter Lee Chun-hee] Suspicions have been raised that the regional housing association apartment 'Ssangyong The Platinum Sajik Asiad' in Sajik-dong, Dongnae-gu, Busan, which set the sale price of an 84㎡ (exclusive area) apartment at about 1 billion KRW last June, deliberately set a high sale price to induce unsold units. Among the 13 units sold to the general public, 11 were sold at half the price, and 4 of these were sold to regional housing association members.

On the 13th, So Byung-hoon, a member of the National Assembly Land, Infrastructure and Transport Committee from the Democratic Party of Korea, claimed, "There is suspicion that the general supply subscription of Ssangyong The Platinum Sajik Asiad was a market disruption act that intentionally induced unsold units."

According to Rep. So, the average sale price announced by the Housing and Urban Guarantee Corporation (HUG) for Busan in June, when the sale took place, was 13.27 million KRW per 3.3㎡, whereas the sale price of Sajik Asiad was set at 28.65 million KRW per 3.3㎡, twice as high. Despite this high price controversy, the apartment subscription ended with a high competition rate of 74.9 to 1.

However, Rep. So stated, "Strangely, the 13 winners who overcame this competition rate and had the opportunity to realize their dream of owning a home gave up the contract despite disadvantages such as the loss of subscription account validity, and those who were association members purchased these houses at about 500 million KRW, which is only half of the originally announced sale price," raising suspicions.

Comparison of Sajik Asiad Official Sale Price and Actual Transaction Price. (* Indicates same address as union member H) (Data from Assemblyman So Byung-hoon's Office).png

According to an investigation by Rep. So Byung-hoon's office, most of the 11 apartments held by the association were resold at an average of 49.7% of the set sale price just over a month after the initial sale. In particular, 4 of these units were contracted by Sajik Asiad association members on July 16, and one unit was purchased by someone living at the same address as an association member.

The 84㎡A unit, which had a sale price set at 998.48 million KRW, was purchased by association member A for 481.06 million KRW (48.2%), and the 84㎡D unit with a sale price of 988.63 million KRW was bought by association member B for 477.34 million KRW (48.3%). Association member C, born in 1988, bought the 84㎡B unit priced at 969.78 million KRW for 467.97 million KRW (48.3%), and member D purchased the 69㎡ unit, originally announced at 847.18 million KRW, for 396.96 million KRW, about 46.9% of the price.

Another individual, E, living at the same residence as another association member, bought the 84㎡C unit, which was planned to be sold at 950.18 million KRW, on July 24 for 441.85 million KRW, a 53.5% discount.

There had been suspicions during the June sale process that the association deliberately set a high sale price to rescue association members who lost their qualification. At that time, an association official rebutted, "We set a high price to increase association profits, not to indirectly give apartments to unqualified association members."

Assemblyman So Byung-hoon of the Democratic Party of Korea. / Photo by Yoon Dong-joo doso7@

However, with Rep. So Byung-hoon's recent investigation confirming that unsold units were supplied to association members at about half the officially announced sale price, suspicions of preferential treatment through loopholes are expected to resurface.

Rep. So said, "If it is true that the association deliberately set a high sale price to induce unsold units in order to rescue those who lost their association membership qualification as defined by the Enforcement Decree of the Housing Act, this is a clear market disruption act," adding, "The Ministry of Land, Infrastructure and Transport must thoroughly investigate whether those who purchased unsold houses lost their association membership and prepare institutional improvements to prevent such disruptive acts from spreading nationwide."

He also urged, "Busan City should conduct a comprehensive inspection of regional housing association projects in the city to prevent the recurrence of such association actions and establish countermeasures."

In response, Kim Ki-dong, head of the Sajik Asiad Regional Housing Association, stated, "We proceeded with the general sale through legal procedures based on relevant regulations," and added, "We plan to take legal action."

Regarding the high sale price controversy, Kim explained, "Dongnae-gu is not subject to the price ceiling system, and although it is a high-price management area, the building was already completed, so the Housing and Urban Guarantee Corporation's sale guarantee was not required." He added that the actual transaction price of the adjacent complex 'Sajik Lotte Castle The Classic' 84㎡ was already around 930 million KRW in June and rose to 1 billion KRW in July, so "there was no intention to disrupt the market with a high sale price."

Kim also said that during the discretionary sale process after the general sale, "There were no contract holders among the rightful winners and preliminary residents, and there were no applicants for the unsold units," and that the subsequent discretionary (first-come, first-served) sales were conducted following proper procedures.