11 Complexes with Contract Condition Changes Among 64 New Complexes in Gyeonggi-do
Recent deposit payment conditions Hillstate Dongtan Station Centric perspective. [Photo by Hyundai Construction]
[Asia Economy Reporter Cha Wanyong] As the rise in interest rates continues to shrink the pre-sale market, new apartment and residential officetel complexes are rapidly changing their contract terms.
According to the construction and real estate industry on the 26th, as the real estate market stagnates due to the impact of interest rate hikes causing unsold units, complexes offering drastic conditions such as reduced down payments, interest-free interim payments with deferred interest, and fixed interest rates are emerging one after another.
According to Chungyak Home, 64 new complexes were sold in Gyeonggi Province by the end of October this year (based on the announcement date of winners), and it was confirmed that 11 of these complexes changed contract terms or presented new conditions. Among residential officetels, 5 out of 19 complexes are notifying changes in conditions.
Recently, Hyundai Construction changed the down payment terms for ‘Hillstate Dongtan Station Centric,’ which is being sold in the Gwangyeok Business Complex, the central commercial and business area of Dongtan 2 New Town. Buyers only need to pay half of the 10% down payment, i.e., 5%, and the company will support the interest on the remaining 5% through a credit loan. Additionally, some lower floors have also offered discounts on the sale price.
To reduce the burden of rising market interest rates, some complexes are applying fixed interest rates with deferred interest payments on interim payments. ‘Jangheung Station Gyeongnam Honorsville Bukhansan View’ and ‘Uijeongbu Station Familier I’ are reportedly applying fixed interest rates of 3.8% respectively.
Applying fixed interest rates with deferred interest payments on interim payments means that even if market interest rates rise, the project entity will bear the excess over the fixed rate. Since the upper limit of mortgage loan interest rates is likely to reach 9% within the year due to the base rate hike, applying fixed interest rates can reduce the interest burden on buyers.
Other complexes are offering conditions such as rolling over six interim payments into the final payment, flat-rate down payments, and free balcony expansions.
A real estate industry official said, “The number of complexes changing contract terms to reduce buyers’ financial burdens is expected to increase,” adding, “In fact, when visiting model houses, one can see various cases presenting different conditions.”
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