Record-Breaking Crowd of 1,800 Flocks to Housing Purchase Briefing
"Basement Below the Floor"... Non-Apartment Market on the Brink of Collapse
Rising Interest in the 'Construction Cost-Linked' Purchase Method
On the 13th, the ‘7th Housing Purchase Business Briefing Session’ was held at the Korea Land and Housing Corporation (LH) Southern Gyeonggi Regional Headquarters in Seongnam-si, Gyeonggi-do. The approximately 600 seats were fully occupied due to the early arrival of a large crowd. About 30 minutes before the event started, the entrance to the main venue, the first-floor auditorium, was controlled. LH guided those who could not find seats to the third-floor conference room, which has a capacity of 350 seats. A dual live broadcast was conducted in case of congestion. Including those standing due to lack of seats, the total crowd gathered at the venue that day was counted at 1,800 people.
An LH official said, "We hold briefing sessions every year, but this year’s crowd is record-breaking," adding, "It seems that many people who find it difficult to sell their houses except through LH after the wave of jeonse fraud have come." LH’s housing purchase project is aimed at housing developers such as construction companies and project operators, purchasing houses that are scheduled for completion or already completed. The houses purchased by LH are rented out to young people, newlyweds, and vulnerable groups at prices lower than market value. The project has been introduced annually through briefing sessions since 2018.
"Interest alone is 2 billion won per month"... Non-apartment market on the brink of collapse
The LH Southern Gyeonggi Regional Headquarters held a briefing session on housing purchase rental. It took place in the third-floor main conference hall, not the first-floor main event hall. Those who could not enter the first floor watched the event here via dual live broadcast. Photo by Choi Seoyoon.
At the event venue that day, there were notably many housing owners holding non-apartment properties such as villas or officetels. They were busy checking whether the houses they own or plan to build meet LH’s purchase criteria and how much they could get if they sell. Not only the briefing session venue but also the six regional consultation booths set up on-site were crowded with waiting lines.
Attendees unanimously said, "If the housing market had been good, we wouldn’t have come here," and "Except for high-end areas in Seoul, both apartment and non-apartment markets feel like the worst." Especially, villas, which were directly hit by large-scale jeonse fraud, have seen a sharp decline in transaction volume, prolonging the slump. A project operator in his 60s said, "I have 25 billion won in loans from banks, so the interest alone is 2 billion won per month," adding, "I came here because there is absolutely no way to solve this." A male CEO of a small construction company in his 60s said, "It’s harder now than during the IMF crisis," and "Even if the profit margin is zero, if I can’t sell houses to LH, my company might have to close immediately."
"Principal guaranteed?" Interest in the construction cost-linked system
The main event hall on the 1st floor of the LH Gyeonggi Southern Regional Headquarters, where the housing purchase rental briefing was held. Photo by Choi Seoyoon.
The ‘construction cost-linked’ system was particularly popular. Considering the high interest, LH devoted nearly an hour solely to explaining this system and conducting Q&A. The construction cost-linked system was introduced for the first time last year. It sets prices based on actual construction costs. This means that at least the principal can be recovered.
After past controversies over ‘high-price purchases,’ LH had lowered purchase prices below cost, which significantly worsened purchase performance. To improve this, last year LH added the construction cost-linked method to the existing ‘appraisal-based’ method, which sets purchase prices based on appraisal values. This year, the criteria for the construction cost-linked system were relaxed from houses with 100 or more units to those with 50 or more units.
Meanwhile, LH plans to newly purchase 50,000 houses, the largest number since the project’s inception, following last year. Of these, 42,000 houses, or 84% of the total, are in the metropolitan area where housing support demand is high. The total purchase volume was 22,000 houses in 2023 and 50,000 houses last year. Given the record-high planned purchase volume, the project start date was moved up by two months to January compared to last year to expedite the project.
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