Controversy Over LH's High-Priced Purchase of Unsold Units: "Irresponsible Practice"
"Increase in General Unsold Units Is Not a Stage for the Government to Bear"
[Asia Economy Reporter Noh Kyung-jo] On the 30th, Won Hee-ryong, Minister of Land, Infrastructure and Transport, announced that he instructed the Korea Land and Housing Corporation (LH) to adjust the purchase rental housing system to better suit market conditions. Regarding the increase in unsold housing, he emphasized that it is difficult to view it as a 'crisis' and that the government has no intention of directly intervening to increase transaction volume or prevent housing prices from falling.
On the same day, Minister Won visited the Ministry of Land, Infrastructure and Transport press room at the Government Complex Sejong and said, "Recently, LH purchased unsold apartments in the usual manner, but this does not meet the rental demand of low-income people who have not yet secured their own homes. It is irresponsible and insensitive."
Won Hee-ryong, Minister of Land, Infrastructure and Transport, is holding a meeting at the Ministry of Land, Infrastructure and Transport press room in the Government Sejong Complex on the 30th. / Photo by Ministry of Land, Infrastructure and Transport
Earlier, LH purchased 36 units (exclusive area 19~24㎡) of the unsold apartments in 'Cantavil Suyu Palace' in Gangbuk-gu, Seoul, as part of the jeonse purchase rental project for vulnerable groups last month. The purchase price ranged from 210 million to 260 million KRW per unit, totaling approximately 7.9496 billion KRW. In response, the People's Solidarity for Participatory Democracy criticized LH for purchasing the severely unsold apartments without additional discounts.
These apartments had a 6:1 competition rate at the main subscription in February last year but experienced contract cancellations. Subsequently, they were offered at discounted prices in July but were not sold out.
Minister Won stated, "Since LH purchases housing for residential welfare using public funds, it must secure the units at the lowest possible price and manage them well." He added, "I requested LH President Lee Han-jun to audit the entire purchase rental project and improve the system to meet public expectations."
However, regarding the fact that unsold housing units have exceeded 60,000, he said, "I do not think it is the stage for the government to take on specific unsold inventory." While post-construction unsold units are 'severe,' the increase in general unsold units cannot be seen as a crisis in the housing market.
Minister Won explained, "We are preparing measures to prevent unsold housing from being neglected by easing financial tightening or excessive transaction regulations, focusing on actual demand and urgent sales, so that market functions can partially normalize." He added, "We will strengthen the market's crisis response function and residential welfare function in connection with the purchase rental system."
Regarding the possibility of direct government intervention in the market, he firmly stated, "We try to avoid it as much as possible." He said, "The moment policies target transaction volume or prices, too many side effects occur. We will make fine adjustments to prevent damage to low-income people due to market conditions, real estate-triggered financial crises, and a hard landing of the overall real economy caused by finance."
On concerns about 'reverse jeonse,' he elaborated, "For actual demanders who need to move and good landlords who must return jeonse deposits, we will try to ease financial and tax burdens by allowing exceptions to the loan-to-value ratio (LTV) on mortgage loans."
He emphasized that companies need to make self-help efforts. Minister Won said, "If companies have earned a lot of money during the domestic housing boom over the past 7 to 8 years, the cycle is inevitable. Companies should make self-help efforts, such as expanding overseas construction. It is unacceptable in a market economy to expect the government to take over or provide bailout funds without effort."
Regarding the construction labor union, he expressed determination to visit the complaint center directly to understand the situation and eradicate problems.
Minister Won said, "I will personally investigate whether reports cover the iceberg's body or are superficial, to deeply understand overall issues and countermeasures." He added, "We plan to proceed in earnest with the goal of reporting the whole-of-government measures to the Cabinet meeting and announcing them to the public by next month."
On the issue of monthly fees for tower cranes, he said, "Tower crane owners and operators are both union members and business operators. If business operators receive unfair money, it is illegal under the Fair Trade Act. We are reviewing whether we can recover the money and punish them under current laws."
He also mentioned that the dismissal of Na Hee-seung, President of Korea Railroad Corporation (KORAIL), due to a series of railway safety accidents is underway.
Minister Won said, "KORAIL's own safety insensitivity and the convenience-oriented collusion between labor and management are serious. Leadership change is inevitable, and we are proceeding with the dismissal recommendation process. The final review committee is expected to be held next month."
Furthermore, he identified Indonesia as a key hub in Asia for overseas orders.
He said, "Indonesia is significant as an early entry point for air mobility, one of the future food industries. We plan to actively pursue orders and cooperative diplomacy. Once the National Assembly schedule is confirmed and consultations with Indonesia are completed, I plan to make a business trip."
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