[Backlash from Bunsangje] Housing Price Regulations Fuel Triple Burden of Lotto Sales, Supply, and Resident Conflicts

[Image source=Yonhap News]

'Lotto Sale' Only Produced by Artificial Control

Government's Assurance of 'Housing Price Stability' Has No Effect

[Asia Economy Reporters Kim Min-young, Moon Je-won] It has been 1 year and 6 months since the government implemented the price ceiling system (Bunsangje) in private residential areas to curb housing prices, but criticism is rising that the policy has only caused supply shortages and resident conflicts as more complexes delay their sale schedules in protest against prices set far below market value. Contrary to the government's claim that housing prices would stabilize, the average apartment sale price in Seoul rose by nearly 400 million KRW during this period, resulting in a few general sale winners hitting a multi-billion won lotto jackpot.

According to Real House and frontline redevelopment and reconstruction project groups on the 9th, among the 309 buildings in 18 districts of Seoul subject to Bunsangje regulations, Dunchon Jugong in Gangdong-gu (12,032 households), Jamsil Jinju in Songpa-gu (2,678 households), and Imun 1 District in Dongdaemun-gu (2,530 households) have all recently indefinitely postponed their sale schedules. Residents of Gwangmyeong 2 District in Gwangmyeong City, the largest New Town in the Gyeonggi area and the first Bunsangje-applied complex there, also delayed the general sale to next year in protest against the recently confirmed sale price.

A Real House official explained, "The general sale price directly affects the burden on union members. Since the general sale price is set as low as half of the market price due to Bunsangje, even if financial costs increase, the atmosphere is spreading to rather delay the project."

The private residential Bunsangje, implemented in July last year, is shrinking the already insufficient housing supply in Seoul. The postponed units from the three complexes?Dunchon Jugong, Jamsil Jinju, and Imun 1 District?amount to 9,994 households, accounting for 28% of the 36,000 units planned for sale in Seoul this year but postponed to next year. This is why criticism arises that the Bunsangje, introduced under the pretext of stabilizing housing prices, has instead exacerbated supply shortages and caused housing prices to rise. According to KB Real Estate statistics, the average apartment sale price in Seoul, which was 950.33 million KRW in July last year when Bunsangje was implemented, soared to 1.23729 billion KRW by the end of last month.

Senior Researcher Doo Sung-kyu of the Construction Industry Research Institute pointed out, "Bunsangje causes a phenomenon where housing supply volumes concentrate or decrease regardless of the housing market conditions," adding, "Artificial price control has only produced lotto sales."