Construction Minister Lee Yong-sup said yesterday the administration intends to set new apartment prices in government-developed sites at 80 percent of the neighboring apartments’ market prices, down from the current 90 percent standard. Also yesterday, the Seoul city government said it would begin to link the prices of new apartments it builds to prices in the same area, pricing them at 15 to 25 percent less than adjacent housing units. Since the beginning of 2005, the central government has set the prices of its new apartment units larger than 85 square meters (914 square feet) 10 percent below the prices of neighboring apartments. Before then, new government-built housing prices were usually dramatically lower than occupied units in the area, giving an opportunity for quick profits that drew speculators like a magnet. Times change quickly in Korea; the Construction Ministry is attempting to mute criticism that its new apartment prices are too high by increasing its discount from prevailing prices. To questioners who wondered if speculators would again spy an opportunity, Mr. Lee said, “Now that the purchasers of new apartments at state-developed sites are banned from selling them for five to 10 years, it is uncertain whether they will make a profit when they sell the apartments.” That assertion, however, has yet to be tested in the marketplace. Seoul’s mayor, Oh Se-hoon, announced the city government’s latest comprehensive housing plan the same day. He said all apartment units up to 85 square meters provided by SH Corp., a contracting company run by the city, will be sold at about 75 percent of the neighboring home prices, beginning immediately. Apartment units larger than 85 square meters will be sold at 85 percent of comparable prices. The older city policy was to sell apartments on a construction-cost-plus basis. The new system will not be applied, however, to northern Seoul’s Eunpyeong New Town, which stirred controversy in September when potential buyers complained about the high offering prices. To mute that fury, the city said it would reprice the units next September, when construction is at least 80 percent complete and more data will be available on actual construction costs. Choi Chang-sik, Seoul’s vice mayor, said the high prices were mostly a result of the high cost of acquiring land for the project. The city also plans to have 11,000 housing units available for long-term lease by 2008.

by Moon So-young <symoon@joongang.co.kr>