[Ryu Taemin's Real Estate A to Z] Is the Post-Construction Sale System the Solution to Poor Construction?

Advantages such as preventing unreasonable schedules
but quality assurance impossible and project burden increases
also contradicts the pre-sale promotion policy

On the morning of the 21st, a 1,200-ton mobile crane is dismantling the tower crane at the Hwajeong I-Park collapse site in Seo-gu, Gwangju. (Photo by Yonhap News)

[Asia Economy Reporter Tae-min Ryu] Recently, following the apartment collapse accident in Gwangju, the ‘post-sale system’ has been mentioned as a solution to prevent poor construction. This is because it prevents unreasonable construction schedules aimed at meeting move-in dates and allows residents to directly check the housing quality in advance. However, it is pointed out that even with the introduction of the post-sale system, apartment quality cannot be fully guaranteed, and it is realistically difficult as it does not align with the current government policy direction promoting pre-sale subscriptions.

Unlike the pre-sale system, where apartments are purchased after checking the model house, the post-sale system starts sales once construction reaches a certain level. Therefore, consumers can decide whether to purchase after confirming an apartment close to the actual product at the construction site. It can also reduce the price gap between the sale price, the price of the sale rights, and the market price at the time of move-in.

However, the problem is that it is difficult to judge defects. It is hard for the general public to access construction sites that are still actively under construction for safety reasons, and even if they do check in person, it is not easy to identify defects in major structural parts. Moreover, most defects such as windows, furniture, wallpapering, and miscellaneous work are concentrated toward the end of construction. At the typical sales point of the post-sale system, around 60-80% of construction progress, it is impossible to confirm these defects.

Lee Eun-hyung, Senior Researcher at the Korea Construction Policy Institute, explained, “There are quite a few apartment defects, such as those caused by veranda expansion or cracks in underground parking lots, that can only be confirmed after moving in,” and added, “The post-sale system conducted before finishing work is completed has a limited impact on ensuring building quality.”

Concerns Over Price Increases and Supply Delays

There is also a downside that the financial burden on construction companies increases, slowing down the housing supply speed. The previous pre-sale system was a kind of interest-free loan method where construction companies procured construction funds by receiving advance payments and interim payments from buyers. On the other hand, if the post-sale system is introduced, construction companies must directly cover funds through PF loans or other means to proceed with construction. Additionally, if many units remain unsold at the sales point, the financial costs from the upfront funds increase, further burdening the construction companies’ projects.

It is also pointed out that this conflicts with the current government policy, which is promoting large-scale pre-sale subscriptions. Since last year, the government has been supplying housing through pre-sale subscriptions for the 3rd New Towns to stabilize the real estate market. Introducing the post-sale system, which is the exact opposite system, in this situation could increase market confusion and likely slow down the supply speed.

Seo Jin-hyung, President of the Korea Real Estate Society (Professor at Gyeongin Women’s University), explained, “The post-sale system not only conflicts with the government’s current policy promoting large-scale pre-sale subscriptions but also raises concerns about price increases, which could increase the burden on buyers,” adding, “Even if post-sale is implemented, it does not practically help prevent safety accidents, so its effectiveness is low.”