Presale prices are continuing to rise even at apartment complexes on public land in the greater Seoul area, where a price cap on new homes applies. The highest presale price for 84-square-meter units has jumped by tens of millions of won within a year at follow-up complexes in the same districts, adding to the financial burden on owner-occupier buyers.
The highest presale prices for 84-square-meter apartments launched this year at four public land sites in the greater Seoul area — the Pungmu station district in Gimpo, Geomdan New Town in Incheon, Godeok International New Town in Pyeongtaek and Goyang Changneung — all came in above those of complexes offered last year, according to the real estate industry on the 20th.
The largest increase was in Goyang Changneung. The highest presale price for an 84-square-meter unit in Block S4, offered in July this year, was 867.19 million won, up 94.3 million won from Block S5 (772.89 million won), which went on sale in January last year. In the Pungmu station district in Gimpo, the highest presale price for an 84-square-meter unit at Hoban Summit Pungmu III, offered in July this year, was set at 762.5 million won. That is 61 million won higher than Gimpo Pungmu Station District Hoban Summit (701.5 million won), which was sold in October last year. Follow-up complexes in Godeok International New Town in Pyeongtaek and Geomdan New Town in Incheon rose 57.5 million won and 36.3 million won, respectively.
Higher construction costs are cited as the main driver. The construction cost index stood at 138.74 in August this year, up 5.98% from a year earlier, according to the Construction & Economy Research Institute of Korea. The Ministry of Land, Infrastructure and Transport also raised the standard construction cost applied to homes under the price cap by 4.07% to 2.328 million won per square meter from 2.237 million won, effective from the 15th of last month.
Forecasts also point to further increases. The presale price outlook index for October released by the Korea Housing Industry Research Institute was 114.3, up 5.5 points from the previous month. Analysts say rising prices for construction materials and labor are pushing up presale costs. Still, because presale prices vary by complex depending on land costs, additional charges and design even within the same public land site, price increases at follow-up complexes cannot be explained by construction costs alone.
Attention is also turning to upcoming launches at complexes subject to the price cap. Namkwang Engineering & Construction and Korea Land & Housing Corporation (LH) plan to offer Bucheon Daejang Housetory Decent in Block A-2 of the Bucheon Daejang public housing district in Gyeonggi Province this month. The complex will have 548 units in sizes of 59, 74 and 84 square meters, near the planned Daejang station on the Daejang-Hongdae line. Schools and parks are planned nearby.