Basic Construction Cost for Housing under Price Ceiling System Increased by 0.87%

Approval Application for Resident Recruitment to Be Applied Starting from the 1st

[Image source=Yonhap News]

[Asia Economy Reporter Kangwook Cho] The Ministry of Land, Infrastructure and Transport announced on the 1st that it will raise the ceiling amount of the standard construction cost applied to housing under the price ceiling system by 0.87%.

Accordingly, the construction cost ceiling per supply area (3.3㎡) will be adjusted from 6,475,000 KRW to 6,534,000 KRW.

The standard construction cost is used as a reference when calculating the sale price of housing subject to the price ceiling system. The sale price of housing under the price ceiling system is determined by adding land cost and additional land and construction costs to this standard construction cost.

The Ministry explained that the actual sale price is determined comprehensively considering factors such as marketability and surrounding market prices, so the impact on the actual sale price will be lower than the increase in the standard construction cost.

Additionally, the Ministry stated that the standard construction cost is set at a level that can supply apartments of appropriate quality applying the latest technology and materials, and through additional charges*, costs for further quality improvement are recognized, so it is expected that high-quality multi-family housing will continue to be supplied.

The main additional charges include those for housing performance grades, consumer satisfaction excellence companies, eco-friendly housing construction costs, intelligent facility costs, high-rise housing additional charges, and structural additional charges.

The Ministry regularly adjusts the standard construction cost every six months, reflecting factors affecting construction cost increases and decreases.

The main reasons for the recent increase in the standard construction cost are the rise in labor costs and the resulting increase in indirect construction costs. The revised notice will apply to those who apply for resident recruitment approval after this date.