Decision Reflects Companies' Desired Selling Prices Within the Purchase Price Ceiling
Korea Land and Housing Corporation (LH) will announce a purchase notice for unsold houses completed in local areas on the 21st. As part of measures to stimulate the regional construction market, the initial target is set at 3,000 units.
According to the Ministry of Land, Infrastructure and Transport, the purchase targets are unsold apartments completed after the tenant recruitment announcement process, covering all local areas except the metropolitan area. Whether to purchase the applied houses will be subject to a separate review. The evaluation will focus on the possibility of rental use and future conversion to sale. Applications will be accepted starting from the 1st of next month.
The purchase price will first have an upper limit, and among the selling price hopes proposed by each company, the lower-priced houses will be used as the standard. The upper limit is set at about 83% of the appraised value. An LH official explained that this was decided by comprehensively considering cases around 2009 when unsold apartments after completion were purchased, as well as the auction winning bid rates of local apartments in courts.
The upper limit will be applied differentially considering the selling price hope ratio per complex and the unsold period. Additionally, the reverse auction method starting from the lowest selling price hope was adopted as a device to induce the industry's self-help efforts. A similar method was used in past purchases. LH decided not to purchase if there is no selling price hope below the upper limit among those proposed by companies.
The purchased houses will be supplied as a secure lease with a jeonse (long-term deposit lease) at about 90% of the market price for six years, after which conversion to sale will be decided. Tenant recruitment will be planned as soon as purchases are completed for each complex.
The government previously purchased 7,058 units of unsold houses completed between 2008 and 2010. At that time, 1,117 units under 60㎡ exclusive area were supplied as national rental housing, and 5,941 units over 60㎡ were supplied as conversion rental housing.
Kim Gyu-cheol, Director of the Housing and Land Office at the Ministry of Land, Infrastructure and Transport, said, "We will manage to selectively purchase high-quality housing in excellent locations by thoroughly reviewing the possibility of use as conversion-type secure lease and encouraging industry self-help efforts such as sufficient price discounts."
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