“Should I hurry even more to buy a home?”...Presale prices soar even at price-capped apartments

[Financial News] Even in publicly developed housing sites in the Seoul metropolitan area where the presale price cap applies, prices at later-supply apartment complexes have risen by tens of millions of won, a review found. With construction costs also climbing, the price burden for new apartments is growing.
According to the real estate industry on the 20th, a comparison of complexes subject to the presale price cap in four major publicly developed housing sites in the Seoul metropolitan area last year and this year found that the highest presale prices for exclusive-use 84-square-meter units supplied this year were higher than last year's in all four areas: Goyang Changneung, Gimpo Pungmu Station Area, Pyeongtaek Godeok International New Town and Incheon Geomdan New Town.
The steepest increase was in Goyang Changneung, Gyeonggi Province. The highest presale price for an exclusive-use 84-square-meter unit in the public-sale complex in Block S4, supplied in July, was set at 867.19 million won. That was 12.2% (94.3 million won) higher than the highest price of 772.89 million won for the same unit size in Block S5, supplied in January last year.
Prices also rose at a later-supply complex in Gimpo Pungmu Station Area. The highest presale price for an exclusive-use 84-square-meter unit at Hoban Summit Pungmu III in Block B4, supplied in July, was 762.5 million won, 8.7% (61 million won) higher than the 701.5 million won price at Gimpo Pungmu Station Area Hoban Summit in Block B5, which went on sale in October last year.
In Pyeongtaek Godeok International New Town, the highest presale price for an exclusive-use 84-square-meter unit at Pyeongtaek Godeok Woomi Lynn Prestige, which went on sale in June, was 57.5 million won higher than at the complex supplied in July last year. In Incheon Geomdan New Town, the highest presale price for an exclusive-use 84-square-meter unit at The Sharp Geomdan Lake Park, supplied in June this year, was set 36.3 million won higher than at the complex supplied in July last year.
Rising construction costs are cited as a reason for higher prices at complexes subject to the presale price cap. According to the Korea Research Institute for Construction Industry, the Construction Cost Index stood at 138.74 in August, up 5.98% from the same month a year earlier. It has risen for 13 consecutive months since turning upward in August last year.
The pricing benchmark for homes subject to the presale price cap has also increased. The Ministry of Land, Infrastructure and Transport raised the basic construction cost applicable from September 15 by 4.07%, from 2,237,000 won to 2,328,000 won per square meter. The increase came just two months after an unscheduled 0.77% hike on July 15 to reflect, among other things, rising rebar prices.
The view that presale prices are unlikely to fall anytime soon is gaining traction in the market. The October presale price outlook index released by the Housing Industry Research Institute stood at 114.3, up 5.5 points from the previous month. The increase was attributed to ongoing cost pressures, including construction materials and labor.
A real estate industry official said, “The fact that presale prices at later-supply complexes in major publicly developed housing sites in the Seoul metropolitan area have all risen above those at earlier complexes suggests that buyers should keep in mind that the price burden for homes subject to the presale price cap could also grow the later they are supplied.” The official added, “For actual homebuyers planning to purchase a home, rather than simply waiting, it is worth weighing the price, location and quality of complexes currently being offered.”
As presale prices at later-supply complexes rise, new projects are also planned for publicly developed housing sites in the Seoul metropolitan area. Korea Land and Housing Corporation (LH) and Namkwang Construction plan to offer Bucheon Daejang Howstory Descent this month in Block A-2 of the Bucheon Daejang Public Housing District in Bucheon, Gyeonggi Province. The 548-unit complex, with exclusive-use areas of 59, 74 and 84 square meters, is a public-sale project with private-sector participation and is subject to the presale price cap.
The complex will be built in Bucheon Daejang District, one of the third-generation new towns. A new Daejang Station on the Daejang-Hongik University Line is planned nearby, and Great Train eXpress Line D (GTX-D) (planned
), S-BRT (planned) and other expansions to the regional transit network are also being pursued. Sites for a kindergarten and for elementary, middle and high schools (planned) are all planned within walking distance. Research, development and office facilities for major companies, including SK Green Techno Campus (planned), Korean Air and DN Solutions, are slated to open at the nearby Bucheon Daejang Urban High-Tech Industrial Complex.

[email protected] Choi A-young Reporter