20 Days After Announcement of Eased Regulations on Precision Safety Inspections
Preliminary Safety Inspection Consent Forms Begin to Be Collected... Applications Expected in January
Old Reconstruction Complexes in Sanggye-dong and Godeok-dong Gradually Resume
"Impact on House Prices Is Minimal Due to Real Estate Slump"
[Asia Economy Reporter Onyu Lim] The Yoon Seok-yeol administration's easing of safety inspection regulations appears to be reigniting major reconstruction projects in Seoul. In fact, aging complexes such as Mokdong 9-danji in Yangcheon-gu, which had faced setbacks during the Moon Jae-in administration, as well as areas like Sanggye-dong in Nowon-gu and Myeongil-dong in Gangdong-gu, are resuming safety inspection procedures one after another. However, market forecasts suggest that the impact of reconstruction regulation easing on housing prices will be limited amid the real estate downturn caused by high interest rates.
According to the real estate industry on the 27th, the Reconstruction Promotion Preparation Committee of Mokdong New Town 9-danji recently began collecting resident consent forms for a preliminary safety inspection. This complex had received a conditional reconstruction judgment in March 2020 but the project was halted after receiving a maintenance judgment in the second detailed safety inspection appropriateness review.
However, the situation reversed after the Ministry of Land, Infrastructure and Transport announced the 'Rationalization Plan for Reconstruction Safety Inspections' on the 8th. The weight of structural safety in the safety inspection evaluation was reduced from 50% to 30%, while the weight of residential environment increased from 15% to 30%. Additionally, the scoring system was revised to allow complexes to receive conditional reconstruction judgments. Since the Ministry also eased the appropriateness review procedures for complexes with conditional reconstruction judgments, the possibility of Mokdong 9-danji passing the safety inspection has increased.
Process of Local Government Review and Adequacy Assessment Request for Reconstruction Safety Inspection (Source: Ministry of Land, Infrastructure and Transport)
The head of Mokdong A Real Estate Agency said, "It won't take long to collect the consent forms," adding, "Once the revised plan is implemented in January next year, the full safety inspection procedures are expected to proceed." Along with 9-danji, 11-danji, which failed the reconstruction safety inspection among the 14 apartments in Mokdong and Sinjeong-dong New Town, is also reported to have started preparations for the preliminary safety inspection.
Some places have already begun official safety inspection procedures following the easing of regulations, which had been a major obstacle to reconstruction projects. Godeok Jugong 9-danji in Myeongil-dong recently applied for a preliminary safety inspection at the Gangdong District Office. This complex also faced reconstruction setbacks after receiving a maintenance judgment in the safety inspection appropriateness review in June last year.
Nowon District Office has commissioned a detailed safety inspection for Wolgye Siyoung (Miseong, Miryung, Samho 3rd phase), a major reconstruction project in the northern area. Although it passed the preliminary safety inspection last year, the project had slowed down due to repeated setbacks in other reconstruction complexes. A representative of the Wolgye Siyoung Reconstruction Promotion Preparation Committee said, "We completed fundraising for the detailed safety inspection, so we applied for it immediately after the regulation easing was announced," adding, "Since the easing measures are applied retroactively, there was no reason to delay."
Sanggye Jugong 3-danji, which withdrew its detailed safety inspection application after passing the preliminary safety inspection in March last year, is also following the same procedure. Nowon District Office has commissioned the detailed safety inspection, and related results are expected in the first half of next year.
Accordingly, the easing of safety inspection regulations is expected to accelerate the progress of aging reconstruction projects in Seoul. Nevertheless, experts analyze that unlike in the past, reconstruction-related positive factors will not broadly affect housing prices due to the ongoing high interest rates and price declines. Park Won-gap, Senior Real Estate Specialist at KB Kookmin Bank, explained, "During a real estate downturn caused by high interest rates, sensitivity to housing price changes due to regulation easing is not high," adding, "Reconstruction complexes tend to have smaller price drops compared to new buildings due to expectations of project activation, so transactions are unlikely to become active."
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