Jeju Won Hee-ryong and Seoul Seocho-gu Jo Eun-hee Hold Joint Press Conference
Announce Results of Independent Investigation
"Calculated Sloppily with Double Standards... Demand for Full Reinvestigation"
[Asia Economy Reporter Kim Hyemin] It has been revealed that the publicly announced prices of some apartment complexes in Seocho-gu, Seoul, were set higher than their actual transaction prices. There were also cases where the publicly announced prices of multi-family or row houses, which are considered affordable housing, surged by more than 100% due to temporary transactions. In Jeju Island, there were sloppy field investigation cases, such as applying the publicly announced prices for multi-family housing to lodging facilities like pensions.
On the 5th, Jeju Governor Won Heeryong and Seocho District Mayor Cho Eunhee held a joint press conference at the People Power Party Central Party Office in Yeouido, Seoul, announcing the results of their independent verification of the publicly announced prices and strongly urged a full re-investigation. After the government announced the publicly announced prices last month, Jeju and Seocho-gu independently formed verification teams to examine the publicly announced prices of multi-family housing within their jurisdictions.
Seocho-gu conducted a full survey of 125,294 multi-family housing units in the district, and among the 7,016 transactions last year, they focused on 4,824 cases excluding special transactions such as share and pre-sale rights, conducting a detailed cross-check.
As a result, it was confirmed that in several apartment complexes in Seocho-gu, the publicly announced prices were set higher than the actual transaction prices. The number of households with a so-called realization rate of publicly announced prices compared to actual transaction prices exceeding 100% totaled 136 households, accounting for 3% of the total. Those with a rate above 90% were 208 households (4.8%), and those above 80% were 851 households (19.8%). The government had announced that it applied a 70% rate this year.
However, it was confirmed that the transaction price of Apartment A in Jamwon-dong (exclusive area 117.07㎡) last year was 1.733 billion KRW, but the publicly announced price was set at 1.871 billion KRW, resulting in a realization rate of 108%. Similarly, Apartment B in Seocho-dong (exclusive area 80.52㎡) had a transaction price of 1.26 billion KRW, but the publicly announced price was set at 1.538 billion KRW. Mayor Cho estimated, "If such cases are expanded to the entire district, 3,758 households would have a realization rate exceeding 100%."
Cases where the publicly announced prices surged in relatively affordable housing such as multi-family and row houses were also found. For example, the publicly announced price of multi-family housing C in Bangbae-dong rose from 186 million KRW last year to 375 million KRW this year, an increase of 101.6%. Row house D in Seocho-dong also rose from 477 million KRW to 1.128 billion KRW during the same period, a 136.5% increase.
According to Mayor Cho, there are a total of 3,101 houses where the average increase rate of publicly announced prices in Seocho-gu (13.53%) was exceeded by more than three times, most of which are multi-family or row houses. He said, "Due to the absence or rarity of transactions until now, a sudden transaction occurrence caused the corresponding prices to be reflected in the publicly announced prices, leading to a sharp rise. Because of the sharp increase in publicly announced prices of affordable housing, 105 out of 1,426 basic pension recipients are at risk of losing eligibility this year."
An inversion phenomenon was also confirmed where the publicly announced prices of rental apartments were higher than those of sale apartments. The publicly announced price of LH 5th Complex rental apartment in Umyeon-dong (exclusive area 84㎡) rose 53.9% from the previous year to 1.016 billion KRW. On the other hand, Seocho Hills apartment (sale) of the same size had a lower publicly announced price of 982 million KRW.
In Jeju, it was revealed that among the places publicly announced as multi-family housing, 11 were lodging facilities. Governor Won stated that these lodging facilities, such as pensions, have been publicly announced as multi-family housing prices for years, even though it is obvious just by visiting the site. He argued, "Similar cases may exist in Gangwon, Incheon, and Chungbuk, which are famous for tourism industries, and nationwide local governments need to conduct field verification investigations."
Additionally, cases were found where only one line in the same apartment complex and building had an increase or decrease in publicly announced prices, or where only one building's prices rose while all others fell. It was revealed that one out of seven multi-family housing units had errors. Governor Won said, "While publicly announced prices can differ within the same apartment, the rate of increase compared to last year should not differ. There have been many cases where the rate of increase differs by as much as 30% between buildings in the same complex, making it impossible to trust the publicly announced prices."
In response, Governor Won and Mayor Cho urged the government to transparently disclose the basis for calculating publicly announced prices. They also demanded an immediate halt to the poor calculation of publicly announced prices without field investigations and called for a full re-investigation when prices surge compared to the previous year. Furthermore, they proposed transferring the government's decision-making authority on real estate price announcements to local governments.
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