Hong Nam-ki "Rising Prices in Reconstruction Complexes Raise Concerns Over Real Estate Market Instability"

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kim Hyunjung] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, recently expressed concerns about the rising real estate prices centered around reconstruction complexes in Gangnam, Seoul.

On the 15th, Hong mentioned apartment price trends on his social network service (SNS), writing, "I am very concerned that the real estate market, which had been stabilizing with difficulty, might become unstable again." Prior to this, the Korea Real Estate Board announced that the rate of increase in Seoul apartment prices, which had steadily slowed before and after the announcement of the '2.4 Measures,' reversed to an expansion (0.07%, up 0.02%p from the previous week) after 10 weeks.

He stated, "According to the Real Estate Board, reconstruction complexes in many areas such as Nowon (0.17%, Sanggye and Wolgye-dong), Songpa (0.12%, Jamsil-dong), and Gangnam (0.10%, Apgujeong-dong) have led the price increases," adding, "Some media also reported that the asking price for Apgujeong apartments (exclusive area 131㎡), which was in the mid-to-high 3 billion KRW range until early this month, recently rose by 200 to 300 million KRW, surpassing 4 billion KRW."

Hong emphasized that reconstruction projects should be approached with market stability in mind. He explained, "Sufficient housing supply is for stabilizing the real estate market, and any instability factors during the supply process must be thoroughly managed. In particular, development profits from reconstruction projects can excessively accrue to landowners (associations), and such expectations can trigger a chain reaction of price increases in reconstruction complexes and surrounding areas. Therefore, it is necessary to approach these projects considering market stability."

Furthermore, he said, "Through the 2.4 Measures, the government guarantees landowners sufficient fixed returns, while the remaining development profits are actively shared with local communities through support for tenants and small merchants, utilization of public rental housing, and provision of living SOC, establishing and promoting a housing supply track (public direct implementation maintenance projects)." He added, "Following the designation of 21 sites (25,000 households) as candidates in the first round in March among sites proposed by local governments and the private sector, 13 sites (13,000 households) were designated in the second round on the 14th."

He reiterated the importance of stable supply through government policy implementation. Hong said, "The government is well aware that young adults, newlyweds, and future generations are all eagerly awaiting housing supply," emphasizing, "Both private reconstruction and public-led redevelopment and reconstruction aim to increase housing supply, but we must always be vigilant to prevent instability in the real estate market during the process. We will closely monitor the real estate market situation while steadily implementing housing supply measures, including the 2.4 Measures, according to schedule."