Pre-Subscription Sale Price "Cheap?"... Controversy Over Market-Level Pricing

Incheon Gyeyang and Namyangju Jinjeop Prices Similar to Market Contrary to Government Explanation
Public Petitions and Online Complaints Overflow

[Image source=Yonhap News]

[Asia Economy Reporter Kangwook Cho] Ahead of the pre-sale application for the 3rd phase of new towns in the Seoul metropolitan area starting on the 16th, controversy over high sale prices has arisen. Contrary to the government's explanation that prices are about 60-80% of the surrounding market prices, some new towns are claimed to have sale prices similar to market prices. Some critics argue that it is inappropriate to base prices on market values given the recent rapid rise in housing prices.

According to industry sources on the 13th, in some areas scheduled for pre-sale applications such as Gyeyang in Incheon, the planned sale prices do not differ significantly from nearby market prices. According to the planned sale prices disclosed by the Ministry of Land, Infrastructure and Transport, the 59㎡ (exclusive area) units in Incheon Gyeyang District are priced between 350 million and 370 million KRW, and the 74㎡ units are priced between 440 million and 460 million KRW. Meanwhile, the 59㎡ units in ‘Hanwha Dream Green’ in Bakchon-dong, Gyeyang-gu, nearby, were traded at 420 million KRW (8th floor) on the 4th of this month, and the 59㎡ units in ‘Hakmaeul Seohae’ in Byeongbang-dong were traded at 385 million KRW. Just a year ago, in July last year, the transaction prices for these two apartments were 330 million KRW and 270 million KRW respectively. Also, the most recent transaction price for a 59㎡ unit in Gyeyang Hanyang Sujain was 400 million KRW (10th floor).

The situation is similar in Jinjeop, Namyangju. The planned sale price per 3.3㎡ for the pre-sale apartments is about 17.83 million to 19.01 million KRW, which is almost the same as the recent average transaction price of 17.62 million KRW over the past month for the nearby ‘Geumgang Pentarium’, built in 2010.

Because of this, complaints are pouring in through the Blue House’s public petition site and online communities. On the Blue House petition site, a post states, "The government, which asked people to wait for the 3rd phase new towns instead of buying houses with ‘Yeongkkeul’ (all-in borrowing), is now pricing sales based on abnormally high housing prices." On an online community, criticism was raised saying, "The government has driven people into a situation where they have no choice but to ‘Yeongkkeul’ for pre-sale applications due to rising housing prices, and then says not to ‘Yeongkkeul’ because prices will fall soon. Does that make any sense?"

Meanwhile, the Korea Land and Housing Corporation (LH) announced on the 16th the recruitment of residents for 4,333 units across five locations: 1,050 units in Gyeyang, Incheon; 1,026 units in Bokjeong 1, Seongnam; 304 units in Cheonggye 2, Uiwang, Gyeonggi; 1,535 units in Jinjeop 2, Namyangju, Gyeonggi; and 418 units in Wirye. Pre-sale applications will be accepted from the end of this month.