Comparison of Complexes with Similar Location and Sale Period
LH Suseo Station Area 34.8% vs SH Segok 2 District 20.7% etc.
An analysis revealed that the profitability between public housing complexes managed by Korea Land and Housing Corporation (LH) and Seoul Housing and Communities Corporation (SH Corporation) differs by more than 20%. There are calls to increase transparency in the sales market by disclosing the actual sales cost.
SH Corporation announced on the 2nd that it derived these results by comparing the profitability between LH and SH Corporation public housing complexes. This analysis targeted SH Corporation's Segok District 2-3 and 4 complexes located in similar areas to LH's Suseo Station Area A3 Block, Naegok District (SH Corporation) and Godeung District (LH), as well as Godeok Gangil 8 Complex (SH Corporation) and Gwacheon Knowledge Information Town S3 and S7 (LH), which were sold around the same time.
According to SH Corporation, the sales profitability of LH's Suseo Station Area A3 Block was 34.8%, while SH Corporation's Segok District 2-3 Complex was 20.7%, showing that LH's profitability was about 14 percentage points higher. The sales profit per square meter was also higher for LH, with Suseo Station Area A3 Block at 2.28 million KRW and Segok 2-3 Complex at 850,000 KRW, a difference of approximately 1.43 million KRW.
The profitability gap between LH's Seongnam Godeung S3 Block and SH Corporation's Naegok District complexes was also significant. The sales profitability of Seongnam Godeung S3 Block was 26%, while SH Corporation's Naegok District was 31% for Complex 1 and 2% for Complex 7.
The profitability of complexes sold in the second half of 2020 was also compared and analyzed. LH's Gwacheon Knowledge Information Town profitability was 50% for S3 and 46.2% for S7, whereas SH Corporation's Godeok Gangil 8 Complex was 34%, showing a maximum gap of 16 percentage points. The sales cost per square meter for the three complexes was similar at around 3.6 million KRW, but the sales profit was nearly twice as high for Gwacheon S3 at 3.54 million KRW and S7 at 3.21 million KRW compared to Godeok Gangil 8 Complex at 1.82 million KRW.
In this regard, SH Corporation argued that public housing developers should disclose the sales cost so that buyers can make rational decisions by comparing the developer's sales profit or the ratio of sales price to cost. The current sales price disclosure system does not reveal the sales cost based on the actual amount spent at the time of completion but discloses the sales price details at the time of the resident recruitment announcement. The sales cost of houses supplied by public housing developers such as LH and SH Corporation is also unknown.
Kim Heon-dong, President of SH Corporation, stated, “Even for public housing developers, it is desirable to create an environment where buyers can judge appropriate prices by disclosing sales costs and profitability,” adding, “We will lead transparent management and policy innovation to make it mandatory for public housing developers to disclose sales costs.”
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